You think the gov are worried about the financial wellbeing of LBSs ?
Cycle to work scheme
- Thread starter woodster0273
- Start date
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Pale Rider
Legendary Member
lol yep, i knew you were just dying to reach this point
The scheme says the bike must be used to commute for the majority of its use, so you could comply by riding it to work once and then hanging it on the wall.
potsy
Rambler
- Location
- My Armchair
Having used the scheme this year for the first time I won't be too upset if it does get scrapped.
The savings are OK but not earth shattering, I think I just wanted to justify buying another bike really (though unlike some mine has actually been used to commute on)
The savings are OK but not earth shattering, I think I just wanted to justify buying another bike really (though unlike some mine has actually been used to commute on)
on a £1000 bike my monthly payments after tax came to about £600 give or take
I do believe that quite a few have got the wrong end of the stick here. It matters not what admin fees or other costs are involved in administering the scheme. The customer simply chooses what value bike that they want and applies for it via their employer and the provider. They then get a voucher which is worth, say, £1,000 and swaps that for a bike which costs £1,000. They then see this as a salary sacrifice on their wage slip which shows the said £1,000 split out over the duration of the agreement (12 months for me) at gross level, but the net pay shows that they have not paid Tax or NI on that amount. So you lose £83 from your gross wage, which equates to around £56.67 after Tax and NI savings. This is based on lower rate tax btw.
So you pay £680 out over 12 months in total. You then have the option of handing back the bike, buying the bike for its residual value (£250 for a £1,000 bike), or accepting the bike as a perk and paying the tax on that amount. In my case a £1,000 bike cost me £730 in total. £680 over the year and then £50 over the following year for the tax on the gift. That's a minimum of 27% saving on a brand new current year bike.
I got my Giant Defy 1 2014 model in Aug 2013, the week that they were released. There were no discounts on this model for quite some time after.
Yes, you can buy one later in the year or last years model for a discount. That is always an option, but C2W certainly works for a minimum 27% saving with a 0% loan thrown in. No complaints here, aside from the £1,000 cap.
The moral of whether it is actually needed is another question, but as a perk it certainly works.
So you pay £680 out over 12 months in total. You then have the option of handing back the bike, buying the bike for its residual value (£250 for a £1,000 bike), or accepting the bike as a perk and paying the tax on that amount. In my case a £1,000 bike cost me £730 in total. £680 over the year and then £50 over the following year for the tax on the gift. That's a minimum of 27% saving on a brand new current year bike.
I got my Giant Defy 1 2014 model in Aug 2013, the week that they were released. There were no discounts on this model for quite some time after.
Yes, you can buy one later in the year or last years model for a discount. That is always an option, but C2W certainly works for a minimum 27% saving with a 0% loan thrown in. No complaints here, aside from the £1,000 cap.
The moral of whether it is actually needed is another question, but as a perk it certainly works.
I was £30 out. Here is the full set of calcs.
These figures have been calculated based upon a 40% tax rate payer. Bizarrely, the scheme is less advantageous for those who pay the lower tax rate on their income.
If you elect for a £1000 voucher, the monthly payment before PAYE and NI are deducted is £96.25. Annualised cost is £1155, which works out to £670 out of your take-home pay.
Because the bike is more than £500, HMRC take the view that at the end of the year it is worth 25% of its purchase price.
What the company decide to do with the bikes at the end of the year will determine your final payment.
If they give you the bike (now worth £250), they are obliged to tax you for this benefit. This would result in an effective final payment of 40% of £250, £100.
Alternatively they may choose to charge the full £250.
So, if the company do not charge you the £250, the cost of the £1000 bike to you is £770.
If the company do charge the full 25% rate, the cost of the £1000 bike to you is £920.
(The company are not allowed to say now what they will do with the bikes at the end of the scheme.)
One final point. Cyclescheme UK who administer this scheme don't do it for nothing. You get a £1000 voucher which you hand to a bike shop for a bike. When the bike shop hand this voucher to Cyclescheme UK they only get £900 back.
In other words, the shop are giving a 10% discount on the bike to Cyclescheme UK.
If you walk into a bike shop with cash (as opposed to a Cyclescheme voucher) you too will be able to secure a 10% discount, possibly more.
Which means the paragraph above should now read : -
So, if the company do not charge you the £250, the cost to you of a bike worth £900 is £770.
If the company do charge the full 25% rate, the cost to you of a bike worth £900 bike is £920 !
Maximum possible saving therefore is £130 on a £900 bike.
Further figures.
In simple terms, the bill for a £900 bike is £1155.
Of the £255 difference, Cyclescheme get £100 and the scheme administrator get £155.
The individual makes a £130 saving and the taxman takes the combined hit for these three winners (£100 + £130 + £155 = £385).
In simple terms, the bill for a £900 bike is £1155.
Of the £255 difference, Cyclescheme get £100 and the scheme administrator get £155.
The individual makes a £130 saving and the taxman takes the combined hit for these three winners (£100 + £130 + £155 = £385).
mythste
Guru
- Location
- Manchester
I don't know. I'm not in govt. Seems sensible that they should be though.
Berk on a Bike
Veteran
- Location
- Yorkshire
Does anyone know if it was scrapped in the speech then?
mythste
Guru
- Location
- Manchester
As far as I can read through various sources, nothing mentioned.
In this example you are correct - but there are many other examples - including cyclescheme where although your payments are 6 months to a year the scheme actually runs for a further 3 years to allow the bike to depreciate until only 3% (sub £500) final value fee remains. This in conjunction with a great discount on last years bike allowed me to get an originally priced bike of £699 for a total cost of £268. And yes, it occasionally comes to work with me when I fancy a pre or post ride.
