Cyclescheme bicycle condition assessment

[DrSquirrel]

Can Cyclescheme (the company) say that you will be offered to transfer ownership?

As the government in C2W guidelines states that your company must not suggest that they will, only that they might - otherwise it's considered a hire purchase and is not covered in the C2W scheme.

 

[2Loose]

The cyclescheme website says:
"If the bike is stolen the employee will be liable for any outstanding monies without any tax exemptions, so it's very important that employees insure the bikes."
...
Officially, it sounds like you won't have to pay a final valuation.

Cheers G00se, as they have had their 12 months worth all ready, I hope you are correct. The final payment can go towards my excess...a small silver cloud, I mean 'lining' of course.

 

[dubman]

Well i took the bike in for assessment yesterday , and im pleased to report it took all of 30 seconds and was marked as category D Just have to wait on the final value now.

 

[Pdoodle]

I bought my bike from a shop 100+ miles away as they were the only ones who could get hold of the particular model I wanted. My company now want me to take it back to this shop to get it valued, what a pain for a 30 second inspection. Could I complete the BCAF1 form myself on behalf of the LBS ? Does the bike shop need to keep any records of the valuation ?

 

[2Loose]

A colleague just got his final valuation on his Trek 6500, which had admittedly been used all year round and collected a D rating at the shop.
Final amount just under 50 quid, so it appears that there is not necessarily anything to be overly concerned about as that is just over a monthly payment.

 

[summerdays]

If that's the case - will it will be those with summer bikes who will be hardest hit ... especially if they have polished it after every outing?

 

[Jezston]

Again, what if my bike gets stolen and replaced a few days before the inspection? Is it fair to get a valuation on a brand new bike? Why then I'd be better off not buying it off them. What then?

This is all bullshit.

 

[2Loose]

Again, what if my bike gets stolen and replaced a few days before the inspection? Is it fair to get a valuation on a brand new bike? Why then I'd be better off not buying it off them. What then?

This is all bullshit.

My experiences match these exact conditions - it was stolen a week ago while waiting for the final valuation. The insurance are replacing it, but there is no longer a cyclescheme valuation required as the bike cannot be transfered into my name anymore as it is lost. My employer\cyclescheme already had the 12 monthly payments so contractually I have completed all that is required.

The replacement will be all mine!

 

[2Loose]

Scrap what I wrote about my colleagues 50quid valuation, it turns out that my employer honoured the original 5% guess-timate and ignored the D valuation...

The worry is how new scheme users willl be treated so it will be interesting to see how others get on with their valuation amounts.

 

[benb]

This is all fascinating. I think an aspect that hasn't been thought about is how employees are possibly being mislead.

The scheme (unfortunately run through cyclescheme, boo) on my intranet says "The scheme allows staff to take advantage of National Insurance and Income Tax savings (through salary sacrifice), which results in savings of between 33% and 40% on the original purchase price of a cycle" and it has examples of bikes, with a £845 bike specifically saying it has a fair market value of £24.

My bike was £799, and if at the end of the scheme I was lumped with a FMV payment of £400, I feel that I would have some comeback on being mis-sold the scheme due to the heavy implication of a nominal FMV.

Even the cyclescheme website only says "Please note :A Fair Market Value payment may be payable upon cessation of the agreement or at the end of the lease period" (my bold)

There's also NHSBikes which states "The loan period is 12 months and at the end of it the employee is offered the option of either buying or returning the bicycle for a nominal payment (typically 10% of the value)"

Now from what has been said above, this is not true, but as an employee you surely have some recourse if you have been mislead about the terms.

 

[sunnyjim]

This is all fascinating. I think an aspect that hasn't been thought about is how employees are possibly being mislead.

The scheme (unfortunately run through cyclescheme, boo) on my intranet says "The scheme allows staff to take advantage of National Insurance and Income Tax savings (through salary sacrifice), which results in savings of between 33% and 40% on the original purchase price of a cycle" and it has examples of bikes, with a £845 bike specifically saying it has a fair market value of £24.

My bike was £799, and if at the end of the scheme I was lumped with a FMV payment of £400, I feel that I would have some comeback on being mis-sold the scheme due to the heavy implication of a nominal FMV.

Even the cyclescheme website only says "Please note :A Fair Market Value payment may be payable upon cessation of the agreement or at the end of the lease period" (my bold)

There's also NHSBikes which states "The loan period is 12 months and at the end of it the employee is offered the option of either buying or returning the bicycle for a nominal payment (typically 10% of the value)"

Now from what has been said above, this is not true, but as an employee you surely have some recourse if you have been mislead about the terms.

I'd certainly take that approach if they gave me the option of handing it back or buying it from them for anything like what I'd pay on the high street for a 1 year old bike in good nick .

More likely, the issue is that if the employer gives or sells you something worth £400 for £50, it's a benefit in kind, so taxable.

This is what HMRC are getting at. If the bike 'fair market' value is a significant % of the total lease payments, then a large part of the tax 'savings' over the year can be recovered.

The whole scheme is based on exploiting a tax loophole - and if it works for bikes, what's to stop it working with white goods or anything else classed as a 'wasting asset' ? I can see why HMRC would want to make it look less attractive.

However I do like the idea of reporting the DFT to the OFT for misleading punters because HMRC had pulled the plug. Joined-up government.

 

[2Loose]

Just received more clarification from my colleague who was asked for 5% of the pre-tax price of his bike.
On top of the £50, He has also been asked the condition of his bike so that they can ascertain the proper value, in which case he will be asked to pay the tax on the 'proper' value. Just the tax.

So, an arbitrary amount PLUS the tax that HMRC should receive on the proper valuation if there is a difference, instead of paying the full amount of a proper valuation and having HMRC extract the tax from that.
Say its realistic resale value is 350quid, then in essence he pays his 50quid + 17.5% of 350quid (£61.25?) = 111.25 final payment altogether, which is about 2 months payments in total.

Sounds sensible, he still makes savings, HMRC get their proper tax cut and everyone is happy and above board. I am not sure if this is just the way my employers are handling this, but it seems fair to me...

 

[sunnyjim]

Just received more clarification from my colleague who was asked for 5% of the pre-tax price of his bike.
On top of the £50, He has also been asked the condition of his bike so that they can ascertain the proper value, in which case he will be asked to pay the tax on the 'proper' value. Just the tax.

So, an arbitrary amount PLUS the tax that HMRC should receive on the proper valuation if there is a difference, instead of paying the full amount of a proper valuation and having HMRC extract the tax from that.
Say its realistic resale value is 350quid, then in essence he pays his 50quid + 17.5% of 350quid (£61.25?) = 111.25 final payment altogether, which is about 2 months payments in total.

Sounds sensible, he still makes savings, HMRC get their proper tax cut and everyone is happy and above board. I am not sure if this is just the way my employers are handling this, but it seems fair to me...

It's income tax, not VAT we're talking about, so 20%[sup]*[/sup] on the 'free' benefit, in this case 350-50=300 * 0.2 = £60 + the £50.

* or, if a rich bastard higher rate taxpayer, 40%

It still means reality doesn't match the brochure.

 

[2Loose]

Yeah ok, income tax not vat, also excuse my maths, but the principle is sound.
Far better than some of the other possibilities that have been imagined over the last couple of months anyway.
Ultimately, money has still been saved over the year, but some of the imagined possibilities were quite painful to contemplate

 

[g00se]

Again, what if my bike gets stolen and replaced a few days before the inspection? Is it fair to get a valuation on a brand new bike? Why then I'd be better off not buying it off them. What then?

This is all bullshit.

If a cyclescheme bike is nicked - you need to pay back the outstanding payments but you also need to pay the tax and NI on those final payments too. Hence the need to have it insured. I remember your bike was stolen a while back - did you inform your employer? If not, you'll have to go mountain biking with the new one the day before the evaluation - if your firm asks a bike shop to value it