cycle to work.......... i dont get it!

[lejogger]

Not a fan of the cyclescheme variant like other people though.

It's a con. I don't mind third party companies that actually provide a decent service, but they don't take away any of the hard work. In most cases payroll still have to action the salary sacrifices. Finance still have to monitor the repayments and balance the control accounts. HR (or someone) still have to collect and ensure that hire agreements are correct and signed.
All the third party do is restrict which bike and which stores you can go to and take a big slice of the pie for the priviledge of identifying your own personal tax saving entitlement! Not only are the repayments slightly higher but they also take you to the cleaners with the disposal fee, or delay ownership transfer for years.

Halfords don't take a cut... they run a decent website that makes signing up and applying an absolute piece of cake. It always used to be a bummer that you had to buy Halfords or hope the special order line can source your specific request, however this year they've started pointing you in the direction of your LBS if you have specific requests enabling you to literally 'hire' any bike you desire (under £1k). Because your employer still pay full whack for the bike initially, the way they deal with the ownership transfer is then entirely in their own hands and can be done as reasonably as possible for the employees.

If you're prepared to knock up your own hire agreements though, and pay multiple LBSs instead of one halfords invoice, going it alone is a very realistic option.

It always helps massively if you have one or two enthusiastic people in influential positions however, and in my experience the schemes that operate the most effectively are the ones that have someone who's prepared to take the time to understand the scheme workings and the different options and translate this to the decision makers. If your work doesn't currently have a scheme there's no reason why that person can't be anyone on here.
It's a shame that those who have had bad experiences are so quick to rubbish the scheme as a whole, without understanding that if implemented correctly then everyone can benefit substantially.

 

[marinyork]

I'm aware of the ins and outs. But I feel we should be encouraging the two people that expressed an interest if they like it to ask/go through one of the better schemes. We've got enough knowledge on here between several of us.

Never bought a bike through C2W and never had to run through the moral maze of being a higher rate tax payer on the scheme FYI. And so on.

We do cyclescheme btw.

 

[lejogger]

... I feel we should be encouraging the two people that expressed an interest if they like it to ask/go through one of the better schemes. We've got enough knowledge on here between several of us...

I completely agree. I've posted on C2W threads many times and have always offered my assistance with regards to explaining how the schemes work, how they should work, and even how to go about setting one up as I've had practical experience of it all.
Perhaps there should be a dedicated area where the myths can be dispelled and sensible advice offered?

 

[jaynana]

i disagree.

as a tax paying amployee, it allows me to pay for the bike before tax.

so if i was paying 50% tax (i wish!), a £1000 pound bike would cost me £500.

this has more to do with the govt than the employer.

how it operates is pretty simple:
1. employer pays the cycle vendor (full price)
2. employer deducts in installments from the employee, PRE TAX (paying pre tax being the key point, so your taxable income goes down, effectively you pay less tax - that's the govt's way of contributing - ie, earning less tax off the employee).

end of the year cyclescheme (not the employer) offers the 3 choices which i mentioned before. (employer has NOTHING to do at this point).

that's it.

so higher your tax bracket higher your savings.

 

[lejogger]

i disagree.

as a tax paying amployee, it allows me to pay for the bike before tax.

so if i was paying 50% tax (i wish!), a £1000 pound bike would cost me £500.

this has more to do with the govt than the employer.

how it operates is pretty simple:
1. employer pays the cycle vendor (full price)
2. employer deducts in installments from the employee, PRE TAX (paying pre tax being the key point, so your taxable income goes down, effectively you pay less tax - that's the govt's way of contributing - ie, earning less tax off the employee).

end of the year cyclescheme (not the employer) offers the 3 choices which i mentioned before. (employer has NOTHING to do at this point).

that's it.

so higher your tax bracket higher your savings.

You're correct almost all the way... apart from your point about the 3 choices. This completely depends upon which scheme you happen to be signed up to. If it's Cyclescheme then yes, you have 3 choices. As I said before, Cyclescheme is not the recommended route.

If you are with a different scheme, such as Halfords, or a self administrated one, the bikes are owned by your employer, not by a third party. They can then choose any way they like to transfer ownership. They COULD choose the 3 options that cyclescheme give, but most likely, they'll do what my employer do and just gift the ownership of the bike to the employer. Why do anything else? They've already recovered the full value of what they paid out. It's not a profit making scheme, it's an employee incentive.
If they gift the bike, then the employee pays tax on the gift based on the HMRC residual value, which is roughly 5-10% of the original purchase price as a general rule.So the employer doesn't have 'nothing to do' at all. If the scheme is a proper one... i.e. the bikes belong to them, not a third party company, then the employer is at this point the most important element as they decide how the asset is transferred and therefore how lucrative the savings are.

Finally, yes, the higher your tax bracket the higer the savings... but that doesn't mean that if you're not a higher rate tax payer, the scheme isn't worthwhile.

 

[Cubist]

My current C2W scheme is run by Halfords on behalf of the company.
You can get a Halfords bike, or any of a long list of bikes that they supply.
Or you can request a particular brand/model and they will give you a list of retailers who will supply that bike for you.

I bought a Cube Peloton Race , RRP £1000 from my local LBS. It is a sought after model, in fact sold out before they finished making the entire run, and the previous model was not available anywhere at any sort of discount. Sorry Crankers!

I am a 40% tax payer and will therefore pay £600 in instalments over the 12 months. I will save some NI, about £20.

At the end of the 12 month period my employer GIVES me the bike.

HMRC calculate that the value of the 12 month old bike is £250, and that it represents a taxable benefit.

I will therefore pay tax on that benefit of 40% of £250= £100.

I will therefore have paid, in easy instalments, £680 for a £1000 bike which after 12 months I will own outright. What's not to like?

 

[lejogger]

My current C2W scheme is run by Halfords on behalf of the company.
You can get a Halfords bike, or any of a long list of bikes that they supply.
Or you can request a particular brand/model and they will give you a list of retailers who will supply that bike for you.

I bought a Cube Peloton Race , RRP £1000 from my local LBS. It is a sought after model, in fact sold out before they finished making the entire run, and the previous model was not available anywhere at any sort of discount. Sorry Crankers!

I am a 40% tax payer and will therefore pay £600 in instalments over the 12 months. I will save some NI, about £20.

At the end of the 12 month period my employer GIVES me the bike.

HMRC calculate that the value of the 12 month old bike is £250, and that it represents a taxable benefit.

I will therefore pay tax on that benefit of 40% of £250= £100.

I will therefore have paid, in easy instalments, £680 for a £1000 bike which after 12 months I will own outright. What's not to like?

Sounds like a great deal eh?

To be honest I think you're underestimating the NI savings you're making. NI is calculated at a rate of approx 12%, so you're not paying £600 in installments... as a 40% taxpayer you're paying only £480. That means after 12 months you own the bike outright and will then pay the £100 BIK resulting in a total value of £580... for a £1,000 bike.

Definitely a great deal. What's not to like?

 

[Crankarm]

My current C2W scheme is run by Halfords on behalf of the company.
You can get a Halfords bike, or any of a long list of bikes that they supply.
Or you can request a particular brand/model and they will give you a list of retailers who will supply that bike for you.

I bought a Cube Peloton Race , RRP £1000 from my local LBS. It is a sought after model, in fact sold out before they finished making the entire run, and the previous model was not available anywhere at any sort of discount. Sorry Crankers!

I am a 40% tax payer and will therefore pay £600 in instalments over the 12 months. I will save some NI, about £20.

At the end of the 12 month period my employer GIVES me the bike.

HMRC calculate that the value of the 12 month old bike is £250, and that it represents a taxable benefit.

I will therefore pay tax on that benefit of 40% of £250= £100.

I will therefore have paid, in easy instalments, £680 for a £1000 bike which after 12 months I will own outright. What's not to like?

If you are paying 40% tax you earn more than enough to pay for the bike outright without any tax breaks.

 

[lejogger]

If you are paying 40% tax you earn more than enough to pay for the bike outright without any tax breaks.

Does he? How much you earn is no indication of disposable income available.

You're referring to the scheme like it's some sort of charity that only those in desperate need should be taking advantage of. I'm not going to pretend that there aren't some who take advantage, that will happen with anything in life, but the government aren't dishing out this relief for nothing. They're investing in a healthier population and a smaller reliance on the NHS. They're aiming to cut traffic congestion and pollution build up.

There's a bigger picture here.

 

[Crankarm]

Does he? How much you earn is no indication of disposable income available.

You're referring to the scheme like it's some sort of charity that only those in desperate need should be taking advantage of. I'm not going to pretend that there aren't some who take advantage, that will happen with anything in life, but the government aren't dishing out this relief for nothing. They're investing in a healthier population and a smaller reliance on the NHS. They're aiming to cut traffic congestion and pollution build up.

There's a bigger picture here.

Yeah but people who earn more benefit more from the scheme than basic rate tax payers which effectively reduces their tax bill much more. Always the way. No different to celebs or bankers or rich politicians using aggressive tax avoidance schemes. Given that low income groups tend to be less healthy and have less money to lavish on Range Rover Sports than high earners, a scheme to get them a good bike more cheaply would be genius thus helping them get around and therefore unburdening the NHS of lots of lardy people with health and life style related illnesses which would massively reduce the cost to the tax payer.

 

[lejogger]

Yeah but people who earn more benefit more from the scheme than basic rate tax payers which effectively reduces their tax bill much more. Always the way. No different to celebs or bankers or rich politicians using aggressive tax avoidance schemes. Given that low income groups tend to be less healthy and have less money to lavish on Range Rover Sports than high earners, a scheme to get them a good bike more cheaply would be genius thus helping them get around and therefore unburdening the NHS of lots of lardy people with health and life style related illnesses which would massively reduce the cost to the tax payer.

That's going to be the case with any tax relief scheme... And I do totally agree with you that it's backwards to give greater relief to higher earners, but it doesn't make the scheme as a whole a bad idea.

I'm more than happy with my minimum 27% saving. It's got me riding a bike I probably wouldn't have been able to afford otherwise, it's got me fit and healthy by cycling to work every day, as well as trying out new forms of cycling in club runs and TTs and the social benefits that club riding brings.

I've saved a fortune in fuel and car servicing. I almost despise sitting in the car these days on the rare occasions that it's necessary.

Obviously on this forum we're all advocates of cycling and the benefits it brings. Surely, anything which makes it more accessible is a brilliant thing, regardless of which areas of society benefit more than others?

 

[Crankarm]

That's going to be the case with any tax relief scheme... And I do totally agree with you that it's backwards to give greater relief to higher earners, but it doesn't make the scheme as a whole a bad idea.

I'm more than happy with my minimum 27% saving. It's got me riding a bike I probably wouldn't have been able to afford otherwise, it's got me fit and healthy by cycling to work every day, as well as trying out new forms of cycling in club runs and TTs and the social benefits that club riding brings.

I've saved a fortune in fuel and car servicing. I almost despise sitting in the car these days on the rare occasions that it's necessary.

Obviously on this forum we're all advocates of cycling and the benefits it brings. Surely, anything which makes it more accessible is a brilliant thing, regardless of which areas of society benefit more than others?

I have cycled pretty much all my life with a couple of breaks due to knock downs. It didn't take a tax break to get me to cycle. I have not had a single tax break from cycling. If any one is due for a tax break or big thank you for cycling it is me and thousands of other cyclists like me who have cost the NHS very little thought out our lives. I await a fat cheque from Mr Osborne NOT. If you really want to do something or believe in something you will do it without the inducement of cash. IMHO it just makes the people who sign up to such schemes appear like money grabbing b*****s who if they couldn't get a cash inducement wouldn't bother - freeloaders. And then there are those who have totally abused the scheme by buying several top pro race bikes that only get ridden on club rides or sportives and never see any early morning or late night commutes.

 

[Cubist]

I shall spend the savings on a hair shirt.

 

[lejogger]

I have cycled pretty much all my life with a couple of breaks due to knock downs. It didn't take a tax break to get me to cycle. I have not had a single tax break from cycling. If any one is due for a tax break or big thank you for cycling it is me and thousands of other cyclists like me who have cost the NHS very little thought out our lives. I await a fat cheque from Mr Osborne NOT. If you really want to do something or believe in something you will do it without the inducement of cash. IMHO it just makes the people who sign up to such schemes appear like money grabbing b*****s who if they couldn't get a cash inducement wouldn't bother - freeloaders. And then there are those who have totally abused the scheme by buying several top pro race bikes that only get ridden on club rides or sportives and never see any early morning or late night commutes.

I don't think I could disagree with you more, and I'm not sure what you're hoping to gain by posting these comments on this forum.

Are you expecting us all to ditch these schemes out of fear of looking like money grabbing b******s?
Should we politely decline any discount the LBS offer and proudly state that we pay full price for our right to cycle?!

As much as you may not like it, money is a massive incentive to the majority of people, and if that makes the difference between more bikes and less cars on the road then I certainly don't have a problem with it.

 

[400bhp]

I have cycled pretty much all my life with a couple of breaks due to knock downs. It didn't take a tax break to get me to cycle. I have not had a single tax break from cycling. If any one is due for a tax break or big thank you for cycling it is me and thousands of other cyclists like me who have cost the NHS very little thought out our lives. I await a fat cheque from Mr Osborne NOT. If you really want to do something or believe in something you will do it without the inducement of cash. IMHO it just makes the people who sign up to such schemes appear like money grabbing b*****s who if they couldn't get a cash inducement wouldn't bother - freeloaders. And then there are those who have totally abused the scheme by buying several top pro race bikes that only get ridden on club rides or sportives and never see any early morning or late night commutes.

What an odd post.