Bike2Work scheme....will I ever own the bike?

[Grant Fondo]

Many years ago I had a bike to work folding bike, paid my installments and then forgot all about the scheme, I the left that work a year later and soon after got a bill for several hundred pounds. After a few emails and telling them they could take the bike back they backed down and I think I paid them a small amout money to own the bike. Not a disaster, but a warning to read the fine print in all these agreements.

I was in the same boat, but was never asked to pay anything, assumed the company just wrote it off?

 

[cyberknight]

From what I can tell , I could have £2,300 of vouchers. (Bike @ £1849 and some extras)
Pay it over 12 months.
Save 33% making the total £1535.
After the 12 months, pay a one off 7% ownership fee of approx £160.
Total cost to me £1695.
Mine after 4 years.
I’d have spent that on just the bike, even with a 10% discount.

our scheme now hits you with 25% at the end so i 1 k bike on basic tax comes to £917 for a basic taxpayer if you decide to keep it after 1 year or extend it to 5 years and pay 2 %

 

[Sloth]

our scheme now hits you with 25% at the end so i 1 k bike on basic tax comes to £917 for a basic taxpayer if you decide to keep it after 1 year or extend it to 5 years and pay 2 %

Are you sure that the 25% isn’t just when you want instant ownership after 12 months?
Otherwise (and according to B2W themselves on the phone yesterday) it’s just 7% once you’ve paid all the instalments off (regardless of amount and term) and you automatically own it after 4 years from start of scheme.
However, they do charge around 25% if you don’t want to wait the 4 years.
Pretty sure that’s right and you’re company may possibly be doing it wrong?

 

[Jenkins]

My emplyer uses Cycle Solutions for the Cycle to Work scheme. This is from their FAQ on ownership...

Cycle to work scheme: Who owns the bike?
This will depend on the type of scheme you choose to run with us. We can talk you through all the options and set you up on a scheme that works best for you and your colleagues.
Traditionally, if you choose a limit of £1000, you (as the employer) will own the bike.
If it’s a scheme limit over £1000, Cycle Solutions will own the bike.
Either option means that the employee is hiring the bike for the duration of their salary sacrifice. It won’t belong to them until the end of scheme selection.
At the end of the salary sacrifice period, the employee will choose their end of scheme method which includes a completely free of charge option to maximise their savings through the scheme.
We will manage the transfer of ownership on your behalf, with a fully HMRC compliant and seamless end of scheme process.

With this scheme, they offer an extended hire period of four or five yeas free of charge after the 12 payments have been made and then transfer the ownership with no final valuation fee feee of charge.

 

[Sloth]

^ This sounds even better than B2W, there doesn’t seem to be any final ‘ownership fee if you wait the full 4 years or so.

 

[cyberknight]

Are you sure that the 25% isn’t just when you want instant ownership after 12 months?
Otherwise (and according to B2W themselves on the phone yesterday) it’s just 7% once you’ve paid all the instalments off (regardless of amount and term) and you automatically own it after 4 years from start of scheme.
However, they do charge around 25% if you don’t want to wait the 4 years.
Pretty sure that’s right and you’re company may possibly be doing it wrong?

thats what i said , if you extend to 5 years its 2 percent , untill last year they always let you have the bike after 1 year for £30 and wrote it off as a taxable benefit so you paid 20 percent of the 25 percent over a year .Now they have new company running the scheme its the full whack

 

[Supersuperleeds]

This is what SHOULD happen - go read the gov guidance notes if anyone is in doubt - although it shouldn't just be a "nominal value".
The company that owns it should calculate the real value. Then you get first refusal at this price. How they calculate this doesn't seem to be clearly documented, but for bikes at the top end I've seen quite large numbers quoted.

IN PRACTICE a few companies charge the true value, and the taxman never investigates the other companies!

The nominal value is normally a one off fee to hire the bike for a further period to take the age of the bike to six years, at which point HMRC rules say the value is then negligible and no benefit in kind will arise on the transfer of ownership

 

[Supersuperleeds]

thats what i said , if you extend to 5 years its 2 percent , untill last year they always let you have the bike after 1 year for £30 and wrote it off as a taxable benefit so you paid 20 percent of the 25 percent over a year .Now they have new company running the scheme its the full whack

HMRC changed the rules and there are strict percentages to apply based on the original price of the bike and the age of the bike at transfer of ownership.

A decent scheme will charge you a nominal fee to give an extended loan period to take you to the 6 years before transferring ownership for free. That way you maximise the tax and NI benefit.

Age of cycle	Acceptable disposal value percentage
	Original price of the cycle less than £500	Original price £500+
1 year	18%	25%
18 months	16%	21%
2 years	13%	17%
3 years	8%	12%
4 years	3%	7%
5 years	Negligible	2%
6 years and over	Negligible	Negligible

 

[cyberknight]

HMRC changed the rules and there are strict percentages to apply based on the original price of the bike and the age of the bike at transfer of ownership.

A decent scheme will charge you a nominal fee to give an extended loan period to take you to the 6 years before transferring ownership for free. That way you maximise the tax and NI benefit.

Age of cycle	Acceptable disposal value percentage
	Original price of the cycle less than £500	Original price £500+
1 year	18%	25%
18 months	16%	21%
2 years	13%	17%
3 years	8%	12%
4 years	3%	7%
5 years	Negligible	2%
6 years and over	Negligible	Negligible

hows that affect anything if you want to get another bike on the scheme if you extend the one you have ?

 

[Supersuperleeds]

hows that affect anything if you want to get another bike on the scheme if you extend the one you have ?

It doesn’t, you can have more than one agreement running at the same time.

 

[cyberknight]

It doesn’t, you can have more than one agreement running at the same time.

with ours if i remember rightly the total couldnt be more than the limit , its now £1500 with it so 2 bikes with a total value of that amount .I would have to check if that includes extended agreement or overlapping payments

 

[kingrollo]

Because you don't have a permanent steady job?
And a compliant employer?
(Unless rules have changed ... )

Ok then ...for clarity. If you had the option to make quite a hefty saving using cycle to work .....imo you would be foolish to pay full price.

 

[kingrollo]

My emplyer uses Cycle Solutions for the Cycle to Work scheme. This is from their FAQ on ownership...

Cycle to work scheme: Who owns the bike?
This will depend on the type of scheme you choose to run with us. We can talk you through all the options and set you up on a scheme that works best for you and your colleagues.
Traditionally, if you choose a limit of £1000, you (as the employer) will own the bike.
If it’s a scheme limit over £1000, Cycle Solutions will own the bike.
Either option means that the employee is hiring the bike for the duration of their salary sacrifice. It won’t belong to them until the end of scheme selection.
At the end of the salary sacrifice period, the employee will choose their end of scheme method which includes a completely free of charge option to maximise their savings through the scheme.
We will manage the transfer of ownership on your behalf, with a fully HMRC compliant and seamless end of scheme process.

With this scheme, they offer an extended hire period of four or five yeas free of charge after the 12 payments have been made and then transfer the ownership with no final valuation fee feee of charge.

That's the scheme and provider I use.

I always get a voucher and go elsewhere for the bike.

Made some big savings.

Our scheme has £10k limit.

Please understand that there are many different providers, schemes, and employees may tweak the scheme further.

So if you scheme or employer operates it differently that doesn't mean anyone has done anything illegal, dishonest or wrong....it's just different.

 

[matticus]

Ok then ...for clarity. If you had the option to make quite a hefty saving using cycle to work .....imo you would be foolish to pay full price.

Oh sure sure - what you wrote was reasonable!

I just feel it's worth pointing out the shortcomings of this scheme.

 

[Kingfisher101]

I'd rather just buy it outright, get one in the sales or secondhand etc.
A lot of people appear to get the bikes then sell them straight away on Facebook/Ebay etc.