Cycle to work scheme

[jimhead]

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.

Yup - I've just finished paying off (over 1 year) a £1000 Defy 1 from CycleScheme. After I'd payed it off I was sent an email and given 3 choices -
1) take full ownership for £249
2) return the bike
3) pay them £69. They "own" it for 3 years until it's effectively worth nothing then transfer ownership to me.

Needless to say I paid them £69.

 

[bpsmith]

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).

Where does the £1,155 figure come from? My £1,000 voucher cost me £1,000 from my gross pay. Where does your additional £155 come in?

 

[Twizit]

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.

As others have said, am sure your figures are correct for Cyclescheme, but other schemes and ways of working can be more efficient. My work uses Evans who don't charge any admin fees and don't levy a further 10% fee against the list price of bikes. You can also add in bikes and accessories at sale prices, and Evans offer £50 of free accessories. My work also offers an extended lease period for nominal cost, so virtually zero BiK price on finally taking ownership of the bike:

So my £1,000 voucher cost £580 with tax savings. For this I got:

£900 bike but discounted to £810 in the sale
£240 worth of accessories, including shoes, tyres, tubes, pump etc
Total value to me = £1,140 (or 1,050 if you use the discounted bike price) against a cost of £580

What's not to like? (apart from the fact that I'm limited to Evans, but even so there's a reasonable enough range)

 

[Berk on a Bike]

The treasury are to monitor the effects on revenue of salary sacrifice schemes, so C2W lives to fight. For now.

 

[Downward]

Hey all.

I had a bike in 2011 - Cost me £250 it was a folder and pretty much lasted a few months before I stuck it in the shed.
I extended the lease by 3 years thus in 2012 for however much I paid.

Got a letter yesterday begging for more money - £30 ownership, £36 if I want to scrap it (Bizzare) or £9 to lease for 3 years.

I have no info on the original purchase in 2011 or 2012 as I no longer work for the company.

On one hand I'm thinking ignore it, The company have made covered their costs and profit and also had a bit more profit with the extended 3 year lease (The company paid them upfront so I know for a fact its all paid for)