Cycle to work scheme - is it worth it?

[DDE]

Hi, new poster here.

I have started cycling to and from work everyday. I have an old hack of a mountain bike at the moment but hope to shift it on and buy myself a starter roadie. I have a budget of about £500.

Anyway, I've been looking at the cycle to work scheme. I'm just wondering if it's worth it? It seems to be just a higher purchase agreement, with some tax and NI savings, but nothing major. And reading the small print, there seems to be some transfer of asset fee at the end of the hire agreement, which for a 1 year old £500 bike would be 18%, so nearly £100! I've also heard that it can be a bit of a ballache if you have to for some reason leave your company within the year, with big personal costs.

I've seen that British Cycling member can get 10% off at Halfords (not compatible with cycle to work scheme). Should I just try to buy the bike outright using a deal like that, or are the tax and national insurance savings worth it, even factoring in the transfer of asset fee?

Cheers.

 

[Cycleops]

Depends how wealthy you are. If you have the dosh buy it outright.

 

[cosmicbike]

As a standard rate tax payer you save about 20 - 22% on the bike cost, and it's paid monthly out of your pay, so effectively an interest free loan too. As long as you have no plans to change jobs then it's simple.
Not all companies ask for the asset transfer fee, I have never paid it.

 

[MrWill]

I've never thought it is worth it or the hassle. So many what if's...change job, fall ill, it gets nicked, written off...

I see people at work using it to buy bikes beyond their means.

If it wasn't for the ctw scheme I really think you would get more for your money. It seems to of changed the pricing structure a bit. The bike shops and manufacturers now see £1000 as a magic number which a lot of people will happily just chuck at a bike now.

If someone does not have a measly £500-1000 saved up to buy a bike, then they should not be buying it in the first place.

All this credit and buying things you don't have the physical cash for, does my tree in. Is why we pay so much for so little in this country for houses. Someone makes money off everything you do here it seems.

 

[HelenD123]

I used it because I knew I couldn't get the bike I wanted for less than RRP so the tax/NI saving was worth it. In most cases though I suspect you're better off waiting for sale time and getting the bike at a discount.

 

[w00hoo_kent]

I've done C2W for both of my current bikes, I'm not sure I've saved that much money on them (my company goes through the a third party company so the asset buy thing doesn't get ignored at the end, although you can pay significantly less to 'rent' it for three more years, then own outright. To be honest I've not bothered looking at the bottom lines for it all, finger in the air I think I probably saved around £200 on a £1000 spend on the first one. Without going through C2W I might have got the bike discounted though. Because it costs the LBS money they are a lot less likely to do a deal. I went for the second one because the first one was easy, I know I'll be in this job for another year (24 years and counting) so that isn't a factor and the £70 a month or so I lose from my pay packet doesn't really feel like paying for a bike (while cautious with money, I'm not actually that great at dealing with it).

If you know what you're doing then compare C2W with getting an interest free credit card for a year, or saving up the money and just buying outright with a deal. We bought my wifes Croix outright and ended up with a bit over £100 of freebies with it.

 

[vickster]

I would probably look for a bike that has been reduced and buy on interest free credit or an interest free credit card and set up a monthly direct debit to pay off

Either way, make sure you insure the bike properly

 

[Paul99]

If you are not sure about staying at your current employer for the next few years then I would probably buy outright rather than using C2W.

There are some great deals to be had on last years bikes, and next years bikes are already starting to appear for sale so discounts will soon be applied to 2014 bikes. Having the cash means you can shop around for a good deal.

Whatever you decide follow @vickster 's advice about insurance.

 

[Iainj837]

I've never thought it is worth it or the hassle. So many what if's...change job, fall ill, it gets nicked, written off...

I see people at work using it to buy bikes beyond their means.

If it wasn't for the ctw scheme I really think you would get more for your money. It seems to of changed the pricing structure a bit. The bike shops and manufacturers now see £1000 as a magic number which a lot of people will happily just chuck at a bike now.

If someone does not have a measly £500-1000 saved up to buy a bike, then they should not be buying it in the first place.

All this credit and buying things you don't have the physical cash for, does my tree in. Is why we pay so much for so little in this country for houses. Someone makes money off everything you do here it seems.

I have always used the scheme, a lot of people don't have the luxury of having £500 to £1000 in the bank.
I use the scheme A) I need to get to work and don't drive and B) I need a reliable bike and not a £100/£200 bike that will fall apart.
I am not living beyond my means but I work hard and to work hard I need a bike to get to work !
so I think the c2w scheme is excellent idea and we'll worth doing IMO

 

[martint235]

Depends how wealthy you are. If you have the dosh buy it outright.

I would probably look for a bike that has been reduced and buy on interest free credit or an interest free credit card and set up a monthly direct debit to pay off

Either way, make sure you insure the bike properly

If you're staying at your job for more than a year I'd say it's well worth it. I got my commuter through the cyclescheme despite having enough dosh in the bank to buy it as I effectively got it for nearly half price.

Yes there is an asset transfer at the end of the first year but you only need to do that if you want to buy another bike under the scheme. You can defer the asset transfer for up to 5 years (when the value is deemed nil anyway).

 

[vickster]

Who keeps a bike for 5 years?

Certainly not me on past performance

You need to do all the sums, if a lower rate taxpayer for example, I don't know how much you'd save on NI/tax, especially having to pay full RRP for a bike (and a potential fee if you want to sell on and upgrade next year)

If you leave the job, I think you just pay back the remaining figure but without any tax benefit, at full whack

 

[w00hoo_kent]

With the version of the scheme we have you get three options at the end of the year, buy outright (quite expensive), rent for 1 more year for a one off payment then own (not cheap), rent for 3 more years for a one off payment and then own (cheap). They basically say "you'd be stupid not to go for option 3" and I think all of it is a bit of a nod to the tax man about buy back but basically you pay the third party company a single hit and they never ask you about the bike again. This is nothing to do with your work, they've already done everything they were supposed to do at this point. Whichever of the three you choose you can still go straight ahead and buy another bike on the scheme.

If you are doing it for savings, there is a break point for costs, on our scheme at least and I think it's £350, which if you stay under gets you a much cheaper bike.

 

[Danny]

Hi, new poster here.

I have started cycling to and from work everyday. I have an old hack of a mountain bike at the moment but hope to shift it on and buy myself a starter roadie. I have a budget of about £500.

Anyway, I've been looking at the cycle to work scheme. I'm just wondering if it's worth it? It seems to be just a higher purchase agreement, with some tax and NI savings, but nothing major. And reading the small print, there seems to be some transfer of asset fee at the end of the hire agreement, which for a 1 year old £500 bike would be 18%, so nearly £100! I've also heard that it can be a bit of a ballache if you have to for some reason leave your company within the year, with big personal costs.

I've seen that British Cycling member can get 10% off at Halfords (not compatible with cycle to work scheme). Should I just try to buy the bike outright using a deal like that, or are the tax and national insurance savings worth it, even factoring in the transfer of asset fee?

Cheers.

I think it is definitely worth it - particularly if you are going to have the bike for a while. From memory I paid around £550 for a £1000 bike - though the rules around the scheme may have changed a bit since then.

I don't know what happens in other organisations, but where where I worked the transfer of assets fee was purely notional and was never actually applied. You should ask around at work and see what has happened to other people who have used the scheme.

 

[BigAl68]

I work for the NHS and have used the scheme twice. Both times for the full grand and we have a fixed maximum of 50 at the end for the asset transfer tax man thing. I would never had the cash to buy my old trek or new shiny PX otherwise. Just check the details of your actual scheme and if you plan to be there in 12 months go for it.

 

[MontyVeda]

...
If someone does not have a measly £500-1000 saved up to buy a bike, then they should not be buying it in the first place.

...

why not?