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

[Tunster]

I've just taken on the Ride2Work scheme through my company. However, it's a tad odd that all of you are stating that you have a final payment on the last month+1. I've got a 12 month agreement where I'll pay up to the end of the agreement and will only need to pay the company on transfer of ownership if I leave the company. For example, if I leave 2 years from now; I'd need to pay 13% of the £499.99 I paid for the bike (= £64). I've got time gaps at 1, 1 1/2, 2, 3, 4, 5 and 6 & over years at less percentages as I go along.

The idea is that I will be here for at least 3 years and that when I move into London in October, the bike will be my main mode of transport around the City. Hopefully the Norco CCX 3 will last that time with lots of TLC!

 

[lejogger]

I've just taken on the Ride2Work scheme through my company. However, it's a tad odd that all of you are stating that you have a final payment on the last month+1. I've got a 12 month agreement where I'll pay up to the end of the agreement and will only need to pay the company on transfer of ownership if I leave the company. For example, if I leave 2 years from now; I'd need to pay 13% of the £499.99 I paid for the bike (= £64). I've got time gaps at 1, 1 1/2, 2, 3, 4, 5 and 6 & over years at less percentages as I go along.

The idea is that I will be here for at least 3 years and that when I move into London in October, the bike will be my main mode of transport around the City. Hopefully the Norco CCX 3 will last that time with lots of TLC!

All schemes vary, especially in regard to the transfer of ownership.

The key issue is the residual value of the bike at the point ownership is transferred. Your scheme seems very flexible in this regard. Others are more rigid in what you are required to pay. Essentially if you pay anything less that what HMRC view as a fair value then you'll be liable to pay tax on the difference. The older the bike at the point of transfer, the lower the residual value and the less you pay or the less tax you pay.

Your scheme seems to be focused on witholding the transfer until the bike has a nominal value, therefore meaning there's nothing at all to pay. The only complication is if staff leave post.

 

[Tunster]

All schemes vary, especially in regard to the transfer of ownership.

The key issue is the residual value of the bike at the point ownership is transferred. Your scheme seems very flexible in this regard. Others are more rigid in what you are required to pay. Essentially if you pay anything less that what HMRC view as a fair value then you'll be liable to pay tax on the difference. The older the bike at the point of transfer, the lower the residual value and the less you pay or the less tax you pay.

Your scheme seems to be focused on witholding the transfer until the bike has a nominal value, therefore meaning there's nothing at all to pay. The only complication is if staff leave post.

I think those time scales are calcuated based on the HMRC recommendations (from what I can see in our benefits handbook). Effectively, it's the companies bike until I leave, but I only pay the acceptable disposal value back to the company to make up the difference from the money I saved taking it as a payment before tax.

 

[marinyork]

Should we politely decline any discount the LBS offer and proudly state that we pay full price for our right to cycle?!

Crankarm's already said his thoughts on reductions. The issue is what he's already said about it. I think that there's a strong case for having a reduced rate of VAT on bicycles of certain cost anyway, but of course as I've said before just about every other scheme anyone could possibly think up would involve more work by politicians than the current scheme. Until that time (probably never) what crankarm said was pointing out the perversity of higher rate tax payers when he's probably more aware than many here that there are huge groups out there that could do with other schemes.

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.

Crankarm's like me. He's (like a fairly small number of other people on here) a lot nearer the bottom of the pile than many of the (extremely affluent) people on this forum. Now the scheme is deeply flawed, but I don't mind it particularly. I didn't get any of my bikes through C2W, only one was bought when I was working (second hand off this wonderful forum) and the rest was when I was unemployed/or a student and not working at that particular time. I'm not particularly bothered by that, they were all worth it even had I paid more for them.

However, I'm also aware of how many people there are out there who would simply jump at the chance of getting interest free and spread payments over 12 months even for a sum as 'small' to other people on here as £200-300. I'm pretty sure that had people I known been able to get on the scheme they'd have bought bikes in the £300-500 range and transformed their cycling from very slow MTBs to superspeedy decent bikes. That's quite sad really, as some have fallen by the wayside.

In the end, the scheme's undoing and saviour will be the scheme itself. The £1000 which nearly all schemes stick to will as has happened already due to component inflation make the scheme more mainstream and the number of higher rate taxpayers getting n+1 bikes out of it will get bored of it and the relative declining value. The scheme will then in its maturity be left to probably cater for the 'more deserving' and growth in cycling we'll have in the coming years. And as more employers join or run the scheme(s) and travel plans mature (2nd gen ones) and so on and so forth. By that time we'll be starting to win the travel plan battle in other arenas and we can argue about other things instead.

So we should do everything we can to get these newbies to join a scheme or get their employer to.

And contrary to what was said about disposable income, the IFS and a few other studies would actually probably agree with crankarm. However as past masters of microeconomics they'd probably point out the various things said on here about encouraging the buying of bikes. And that even applies to people with pots of disposable income too.

 

[Crankarm]

What an odd post.

No not really. The biggest tax incentive the government could make would be to make all bikes and accessories zero rated for VAT which would be much fairer for everyone rather than giving Mr Money bags more tax relief because they earn more than a basic rate tax payer so they get the said same bike for a lot less than if Mr average/low income was purchasing it. And it also depends whether your employer will entertain C2W. If they won't then you are stuffed. One also needs to be in relatively secure employment as the contract is at least several years. I wonder how many bikes actually purchased through the C2W are actually used everyday to commute to and from work? 50%? AFAIK if you are self employed you can't make use of the scheme either.

 

[lejogger]

No not really. The biggest tax incentive the government could make would be to make all bikes and accessories zero rated for VAT which would be much fairer for everyone rather than giving Mr Money bags more tax relief because they earn more than a basic rate tax payer so they get the said same bike for a lot less than if Mr average/low income was purchasing it. And it also depends whether your employer will entertain C2W. If they won't then you are stuffed. One also needs to be in relatively secure employment as the contract is at least several years. I wonder how many bikes actually purchased through the C2W are actually used everyday to commute to and from work? 50%? AFAIK if you are self employed you can't make use of the scheme either.

The contract at our place is a year. I decided that it would be too complicated to run it any longer due to our high rate of turnover. Recover the cash and transfer ownership ASAP.

In terms of self employment, you could probably claim relief on a bike through your tax return couldn't you? Not sure about that one.

And 50% of c2w bikes being used for work purposes, or 'mainly' for work purposes is probably generous. I still think that as long as it's being used and people are improving their health and not using the car as much it's a good thing, regardless of whether the rules are being strictly adhered to. It's practically un-policeable.

 

[lejogger]

No not really. The biggest tax incentive the government could make would be to make all bikes and accessories zero rated for VAT which would be much fairer for everyone rather than giving Mr Money bags more tax relief because they earn more than a basic rate tax payer so they get the said same bike for a lot less than if Mr average/low income was purchasing it. And it also depends whether your employer will entertain C2W. If they won't then you are stuffed. One also needs to be in relatively secure employment as the contract is at least several years. I wonder how many bikes actually purchased through the C2W are actually used everyday to commute to and from work? 50%? AFAIK if you are self employed you can't make use of the scheme either.

ps I'm not saying that a different way of discounting bikes is not better than c2w or that c2w is completely fair, or an ideal
solution. It's none of those things.

Of course it's topsy turvey that the wealthier save more, but that doesn't make it a terrible thing because it does benefit all, even if it's not the way we'd like it to in an ideal world.

 

[Norm]

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

I'm confused, Cranky. Is your issue still that the scheme is poor value or that 40% marginal rate taxpayers save more money?

 

[lejogger]

Phew, Norm's here!

 

[marinyork]

Of course it's topsy turvey that the wealthier save more, but that doesn't make it a terrible thing because it does benefit all, even if it's not the way we'd like it to in an ideal world.

It's a hard one to get across. Some people right at the bottom have the get up and go to get a bike and slowly work their way up. They've overcome severe lack of funds. They've overcome vandals and thieves. They've put a lot of effort into travelling distances (often on slower bikes) than other people they know wouldn't. Buses might not go where they travel to or be a poor service. They have no car. Do they give up? No. Do they get any help? None whatsoever. They probably even get laughed at by their contemporaries and have to put up with the traffic conditions they may not like and a few idiots. Some may have even done it for years without seriously interacting with other cyclists much. It's perfectly possible if you live in a non-participating cycling neighbourhood.

Think of it like MPs expenses. When we had it discussed on here as cycling is a very middle class activity there were a lot of comments justifying and playing down the behaviour because they were from a world of small time expenses and higher salaries and thought MPs didn't earn that much money. Some got very upset at the uppity peasants when people were mentioning things like immoral behaviour and greed. To people at the bottom if they are aware of the scheme (many aren't) it looks extremely bad that higher rate taxpayers are getting more help. Then they speak to someone who has been on the scheme and they will probably say something like oh it's dead easy, I've had 2 or 3 off my scheme, don't worry if you get a bike initially and decide you need a better one, you can get another much more expensive one next year! You don't even have to use it to cycle to work! The person listening then goes away and finds that their company doesn't offer it and if it does it is cyclescheme.

So within that context it's very hard to explain benefit for all. Safety in numbers? You come from a neighbourhood where no one cycles, it makes no difference to you. More bicycle sales and shops offering more services? You're skint and spend very little on bike stuff. Campaigning benefits of more cyclists? You cycle on your own and don't believe any of the ****ocks that these middle class people who probably look down on you are telling you. And so on.

 

[jaynana]

coming to the forum after what.. 24 hrs? yesterday the debate was that cycleschemes were a pile of crap. looks like a lot of ppl see the benefits.

rather dissapointed with some ppls attitude really. but then that's what it is in the world i guess. ppl have different openions!

yes, it incentives the higher tax payer more. so what? that should encourage to earn more!

nothing comes free, no free lunches, no free give aways where the lesser tax payers get higher benifits! how is that ever goin to work?

there's a cost on the govt by way of reduced taxes, they benifit in turn by ppl living healthier and less NHS costs.

does that make it a bad thing or a scam?? no!

i used to cycle way before i got into cyclesheme. eventually i wanted to go for a higher end bike, and i researched and proposed the cyclescheme to my employer, who went with it, and now all my colleagues from low tax payers to high tax payers have the benifit!

and i continue to cycle. no change.

when there's no cycle scheme i cycled. when there is a cycle sceme and as it gives a benefit i took the benefit and i still cycle.

simples (c).

 

[marinyork]

coming to the forum after what.. 24 hrs? yesterday the debate was that cycleschemes were a pile of crap. looks like a lot of ppl see the benefits.

rather dissapointed with some ppls attitude really. but then that's what it is in the world i guess. ppl have different openions!

yes, it incentives the higher tax payer more. so what? that should encourage to earn more!

nothing comes free, no free lunches, no free give aways where the lesser tax payers get higher benifits! how is that ever goin to work?

LOL you're really funny. If you think that's complaining and so on, you ain't seen nothing. I actually really liked this thread because someone had discovered the c2w scheme and seemed really happy. Fair play to them. I'm happy for them if they go through c2W or get interest free credit from a shop.

yes, it incentives the higher tax payer more. so what? that should encourage to earn more!

nothing comes free, no free lunches, no free give aways where the lesser tax payers get higher benifits! how is that ever goin to work?

I like the encourage them to earn more comment, that's the most amusing comment of today.

Why wouldn't you be able to have lesser tax payers getting higher benefits? You could easily think up such systems. You simply lack imagination. As I've said anybody on here could think up a better system in the sense of not having to actually get politicians to pass it as primary legislation, it would just be politically extremely difficult to get them to implement. That's why we're stuck with what we have at the moment. As anyone knows who's been involved in schemes trying to get people to cycle, the uptakes are 'low' and it's a lot of hard work.

 

[Crankarm]

I'm confused, Cranky. Is your issue still that the scheme is poor value or that 40% marginal rate taxpayers save more money?

Both . Depends on your financial status. If you is poor it is less attractive than if you is rich/middle class, a higher rate tax payer, then the scheme becomes good value. If you is unemployed the scheme is irrelevant, probably the group of people who could most benefit from getting a bike, according to right wing Tory Norman Tebbit. The retired can't take advantage of the scheme either which seems a bit rough.

 

[Cubist]

^^
This.

Bikes should be VAT free IMHO for people on benefit at the very least, including the low-waged, but C2W doesn't seek to address that, it tries to get people out of cars and onto bikes. I accept that many will simply buy a £1k roadbike and mothball it for an ebay "as new "bonanza, but I and others have been encouraged into regular cycling by the scheme. I save a lot of road miles in the car, and am fitter for the experience. I even gave up smoking in order to enjoy cycling more. I rejuvenated my interest in bike-building and help out others with servicing and advice FOC so that I can put something back into it.

I bristled a bit at your class-warrior post Crankers, but do sympathise. My motives for joining the scheme are not necessarily exploitative.

 

[Big T]

I too am a lifelong cyclist (been riding for 38 years), but I've bought 2 bikes on the C2W scheme in the last 4 years. The great benefit of the scheme to me is that you don't have to pay a huge sum of money up front to buy a bike. Reducing VAT to zero on bikes would make them 20% cheaper but you'd still have to buy the bike outright at the beginning.

The scheme's not ideal in that it's 4 years before you get to own the bike outright and you have to play the game according to Cyclescheme's/HMRC's rules, but you still make substantial savings and pay for the bike monthly, not all in one go.

Both my C2W bikes are regularly used for cycling to work. If i'm going straight there and straight back, I'll used the tourer. If i fancy going for a ride after work, then I'll use the audax. I cycle to work every day as there's no staff parking at work and its slow and expensive to get there on the bus.