This is the reply I received from them when I asked about it a while ago:
Dear Chris,
Further to your email regarding the Transfer of Ownership.
Following clarification from HMRC on their stance regarding the sale of cycles to employees at the end of the hire period it has been confirmed that the bikes should be individually valued at the end of the Hire Period. If you would prefer to opt out of Clause 5 of the employer contract and handle the Transfer of Ownership of the cycles please write to us on company headed paper and we can amend your account to reflect this.
We would recommend that the following procedures are put in place if you would like to handle the Transfer of Ownership to ensure you are operating within the HMRC guidelines:
At the end of the Hire Period contact the employee and ask them if they wish to take ownership of the bike.
If the employee does want to take ownership, the employer should seek expert advice (from local bike shops) to assess the value of the bike.
Based on this assessment, calculate how much the full market value should be.
Send an invoice to the employee along with a Secondary Agreement that they employee will need to sign to confirm the transfer
If the employee is able to purchase the bike for less than its market value, the difference will be liable to tax and employers NIC liability.
To avoid any such liability employers can take advantage of Cycleschemes free-of-charge Transfer of Ownership service.
Cyclescheme pays the employer a one-off nominal fee to transfer the ownership of all bikes, and subsequently handles all aspects of the administration of the sale of cycles to the employees. There is no cost to the employer, but Cyclescheme retains Full Market Values paid by the employees.
After the end of each hire period Cyclescheme will contact the employee to assess the condition of the Bicycle and issue a Secondary Agreement for the appropriate value. The employee can self-assess the condition of the bike using Cyclescheme simple yet comprehensive condition guide, or print off the form and take the bike to their local Partner Store for assessment. The employee would then be asked to categorise the condition of the bike on-line; below is a summary of the conditions:
Condition A: A cycle that has been ridden regularly but infrequently to and from work throughout the hire period. Predominantly used on the road or cycle paths for short distances
Condition B: A typical commuter’s bike that has been used regularly and frequently, maintained and serviced, been cleaned and lubricated throughout the hire period. Some leisure use has occurred
Condition C: A cycle that has been regularly used for commuting all year round. It has been used regularly for leisure that may have included off-road riding.
Condition D: A cycle that has been used frequently for commuting & leisure but without anything more than the minimum care necessary. Large mileages would have accumulated on the bicycle and a reasonable percentage of these may have occurred off-road.
The value of the FMV is variable according to the assessed condition of the bike, and the original retail price of the bike. Needless to say, it is not possible to predict the market value of a bike prior to the end of the hire period, but in our experience the bike’s value is typically a fraction of the original retail price due to the frequency of usage encountered when commuting to work throughout the year and any additional leisure usage.
Employees can pay to take ownership of bikes with ease using our on-line payment portal, and Cyclescheme issues a full receipt to the employee. All stages of the transaction and the value of sale are stored securely on our Extranet system, accessible to employer administrators at all times.
I trust to have answered your question fully with the above information, but if you require any further guidance, please visit our website at
www.cyclescheme.co.uk where you will find in-depth details and FAQs regarding many more aspects of the scheme.
Best wishes from the team at Cyclescheme!