Cycle to work advice

[Black knight]

Hi,


Just come home to find a letter dated 1st Nov from my HR department.

Basically is outlines a change in the final payment system.

Their chart shows under the old arrangments, final payment on a £500 cycle would be £20.

Under the new arrangments the final payment is £125.

This is in addition to the cost of the lease which is circa £460

They apologise of being unable to notify me in a more timely manner but I note they were notified Aug 9th. They have not sent letter out until November 1st.

I'm awaiting a call back from HR, it's likely my view will be to return the cycle as is. So far I have only made 1 payment of £35ish.

Can I do this or will I be forced into a year long contract?

Thanks.

 

[Theseus]

At the very worst they can't make you buy the bike at the end of the hire period. So use it for the year as per your contract and then tell them that you don't want to buy it and they can have it back.

You could also let them know that you intend to charge for storage of company property at your home at a fair rate until they come to collect it.

 

[Brains]

It depends on the agreement.
If it's in writing, and the first payment was made on time on the basis of the original agreement
then neither side can change the rules half way through the game.

 

[summerdays]

They can't say what the final payment will be (Norm will be along to repeat that in a bit - see I have listened Norm!).

My hazy understanding is that you get it valued and that the end valuation is probably no more than 25% (not sure about that bit) but that it can be less depending on the condition of the bike... with those being used twice a year in high summer getting the highest values and those who are used throughout the year and with no obvious maintenance getting the lowest value... A friend made sure his was very muddy etc before he took it in and he had used his daily and he got a band C or D valuation.

 

[jig-sore]

This is in addition to the cost of the lease which is circa £460

are you sure your allowing for the money you save by making the payments "before" tax and insurance ????

sounds to me like you got your facts wrong

 

[carolonabike]

Hi,

This is a result of the marvellous HMRC who brought out new rules defining an acceptable market value in August. Previously, a notional value was used but now they have produced a fixed value table, so after 12 months the value is deemed to be 25% reducing each year thereafter. (18% after two years and so on if my memory serves).

I administer our cycle to work scheme and our plan is for the the company to keep the bikes after the 12 months allowing the employees to have the use of them for a few more years until the value has decreased to almost nothing.

If you can persuade your company to do this you can in effect keep the bike after the year is up, continue to use it for free and then buy it after an agreed time period. If they have used a provider they will be able to get advice on how to do this.

I would also add you seem to be paying a lot for your bike, my bike cost £1000 but net of VAT and by using salary sacrifice I'm only paying £48 for 12 months. Have they charged you the VAT aswell? On your figures you're not really saving much at all.

 

[carolonabike]

You might like to look at this link This is the one we use. It has lots of useful info which may help.

 

[Black knight]

Yes £500 voucher

13 payments of £35ish quid (gross)

 

[Black knight]

Pretty pised off with the whole thing tbh. The saving is negligible through C2W. With the new changes i'll actually be paying a premium of 20% over list price.

 

[carolonabike]

That makes sense, so your net salary reduction should be in the region of £22.00

I would have a word with your HR dept about the final payment. There's lots of wiggle room. It's in the interest of the scheme operators to keep the savings as attractive as possible, otherwise the whole system comes crashing down.

 

[Flying_Monkey]

"I administer our cycle to work scheme and our plan is for the the company to keep the bikes after the 12 months allowing the employees to have the use of them for a few more years until the value has decreased to almost nothing"

This, and the situation outlined by Black Knight, seems to me to be mean-spirited policies which are against the original intention of the whole scheme. I guess some changes in the existing law are needed to stop companies from exploiting this scheme to the disbenefit of their employees, though i am not surprised that some of the less pleasant companies have worked out how they make what was supposed to be a win-win situation into a way of screwing their employees.

 

[carolonabike]

It's not mean spirited, it's a way of avoiding the new final payment situation which almost wipes out the savings; that's the Inland Revenue's doing not the companies. This way, after the lease term is up, we, the employees still use the bikes but we're not paying for them anymore. Then after three or so years the bikes are deemed by the IR to be almost worthless so the employee can buy the bike at that point for next to nothing, or not.

 

[Flying_Monkey]

It's not mean spirited, it's a way of avoiding the new final payment situation which almost wipes out the savings; that's the Inland Revenue's doing not the companies. This way, after the lease term is up, we, the employees still use the bikes but we're not paying for them anymore. Then after three or so years the bikes are deemed by the IR to be almost worthless so the employee can buy the bike at that point for next to nothing, or not.

Okay, accepted.

 

[Black knight]

The final payment situation is ridiculous. The bike will either going back this week under a cancellation or ill leave it out to get stolen.

The agreement was to sell at fair value they can't stipulate fair value on age alone.

If they want to change he terms of the agrement they should make new and allow those that now dont want to participate to return the bikes.

 

[carolonabike]

It's just one of the hoops we have to jump through in order to make sure the bike doesn't become a 'benefit' and therefore subject to tax. The employer has to own the bike and 'loan' it to the employee, similarly the employer isn't allowed to tell the employee that they can buy the bike after the lease period, although in practice that's what happens