Bike To Work

[Cedric]

Hi! My place of work has a bike to work scheme. I'm tempted, but the more I look into it, the more I'm concerned that it may be a piece of dodgy fraudulent environmentalism and a bit of a rip-off.

This may not be true, but it sounds like your employer buys the bike, tax exempt on your behalf, and on the completion of the purchase, the bike actually belongs to your employer and not to the person who has been paying for it. For the outlay of £0.00 your employer gains possession of a bicycle. The tax exemption accrues to the employer not to the employee. The employee now has the "right" to buy the bike he has paid for at its current resale value.

If this is the case, and many apologies if I've gotten this wrong, it seems to me that the payments, even minus tax, added to the final purchase from the employer isn't going to be very different from the original retail price. Any advantage seems to be in favour of the employer, who gets to sell you a secondhand bike that he didn't pay for.

Also, there seems to be very little flexibility in the system. Viable options for commuter biking I think should include last season bargains from LBSs and decent secondhand bikes (recycling right?). My place of work is affiliated with the most expensive bike shop in town. I don't want to buy from them.

BTW, I'm not trying to piss off decent retailers who impliment the BTW scheme, it just seems like it may not be what people think it is.

 

[hackbike 666]

They just started this at my work.Showers almost built.I've only been there 20 years.It took them that long.I won't bother they can poke it up their rear end.I've always saved up and splashed out for a new bike and nothing will change there.

I remember the anti-bike bad old days and all the crap that came with it.

 

[Wigsie]

I guess it depends on your work and the regs they have in place.... one of my colleagues has just finished the years payments and she paid 1p as a final 'fair' market value payment for the bike she bought (£1800 Trek MTB) for it to be officially hers. I have heard stories of some offices charging £200 at the end, which is crazy! I got my Allez for £1000 and will end up paying around £550 + 1 penny for that £1000 bike.

Seems simple to me, however if work turned round and said they want £350 at the end of the 12 months then I would not have done it! I do usually do things the old fashioned way (saving) as this bike is the only thing I have on HP or loan or anything.

 

[goo_mason]

Ours is 5% of the cheque you originally got to pay for the bike. My SCR2 is about to become mine for a settlement of £27.50. Of course, the alternative is that I hand the bike back to them for disposal, but I'd have to pay a £60 handling fee for that.

I wonder if anyone's ever given a bike back ?!

My bike cost £545, I got 15% of that value free on top to buy accessories, and after the tax/NI exemption savings it'll have cost me something like £300-ish overthe year. I'd call that quite a decent saving.

 

[Cedric]

So what you'd want to do is to establish what percentage of the original price you'll be liable for before you sign up then? Sounds a bit like you're at the mercy of your employer.

 

[Black Sheep]

So what you'd want to do is to establish what percentage of the original price you'll be liable for before you sign up then? Sounds a bit like you're at the mercy of your employer.

if you do that then get it in writing

wonder what happens if you get made redundant part way though the scheme?

 

[goo_mason]

if you do that then get it in writing

wonder what happens if you get made redundant part way though the scheme?

You have to cough up the remainder of the cost. We were warned this year to consider whether to get a bike or computer on the work schemes if you thought that there was a risk of redundancy. Fortunately we were already in the middle of the consultation period when the 2009-2010 benefits selection period opened.

 

[goo_mason]

So what you'd want to do is to establish what percentage of the original price you'll be liable for before you sign up then? Sounds a bit like you're at the mercy of your employer.

If you ask before you go ahead and decide to join the scheme, then at least you'll be able to find out if the final cost would be prohibitive.

And remember, whoever your company signs up to should be able to order in bikes from other manufacturers. I had Halfords order for me from Giant (as Halfords don't sell Giant), as I wanted an SRC2. So you're not always stuck with the preferred supplier's range....

 

[HF2300]

Cedric, this probably all depends how much faith you have in your employer, as there is a certain amount of trust involved on both sides.

The reason the scheme works the way it does is because it isn't really a set scheme, laid down in law; it takes advantage of two separate tax concessions - first, your employer can loan or hire you a bike without you being taxed on it as a 'benefit in kind', and second, you can pay the hire charge by a reduction in your gross wages (salary sacrifice). Neither of these involve the purchase of the bike; you have to sort that out with your employer afterwards.

You're sort of right in your second paragraph about the way the scheme works, but the employer buys the bike outright immediately; your payments are a monthly hire fee for it, not to purchase it.

As Summerdays has said in the other thread, your employer can't promise to sell you the bike at the end of the scheme, much less put anything in writing, as it will then become a hire purchase and you'll both lose the tax exemption. Officially, the hire must finish first and then the employer has to decide what to do with the bike.

That doesn't mean you can't sound them out unofficially about what they propose to do with the surplus bikes at the end of the hire period, but the hire agreement and eventual disposal must be two separate things.

Both parties get a tax benefit. Your employer can claim back the VAT, and if they're decent will pass that saving on to you. Because your gross wage is lower, you and your employer pay less tax and NI, so you both save that way. If you purchase the bike after the hire for a typical fair market value of, say, 5% of original cost you end up saving some 40% + of the original price - worth having.

Don't forget, current resale value is the employer's opinion about what they can realistically get for a bike. You or I would eBay a bike and get the most money for it, but a large (or even small) company often can't be bothered with the time and hassle it takes to do that and just want to dispose of an asset quickly and easily. The flipside of that is they'll get less money for it, often much less.

As for flexibility, well, that depends entirely on how your employer runs the scheme and who they go to for their bikes.

I think the scheme's everything it's cracked up to be, provided you're not tied to a very restricted choice of bikes; you just have to make sure you understand it.

 

[J4CKO]

I cant imagine my company will want a rather careworn 18 month old bike when I have paid for it !



Its a great scheme, there is no sinister reason for it other than to get people fitter and for the government to be seen to support greener alternatives, the sinister side is people buying expensive Mountain bikes that they then stick in the garage for ever and never use.

 

[TheDoctor]

It's a great scheme. I'm using our one to get a Brompton at 40-odd% off. And buying the bike at the end costs 4% of the 'new' value. I'm sure I could then sell it at a good profit and do it all over again!!!

 

[lazyfatgit]

If you want or need a new bike for a commute and you trust your employer not to rip you off, then whats not to like about savings on tax and NI?