Just a little Cycle to Work question.

[fudgepanda]

I've done a search of the site looking for this answer, but come up empty handed so......

Next month will be the 1st anniversary of me entering the Cycle to Work scheme and I've been looking at their website but the answer I've found gives me more questions, so I'll write what I think it is and then feel free to tell me I'm an idiot while pointing out why.

I got my bike in September last year, and it was about £800 including bits & pieces. As I understand it, the FMV (Future Minimum Value) would be calculated as being 25% after 12 months. £800 X 25% = £200. As it was in the over £500 category, it would seem that it's rated in the higher (7%) group. Therefore, £200 X 7% = £14. After 18 months it would be 21% and after 2 years the figure would be 17%.

So does anybody know if that's it? I pay £14? Can't be surely, it all sounds so simple.

Or should that read TOO simple?

 

[Leodis]

I'm no good at Maths but I was offered £250 on a voucher of £1000 and a bike worth £900, the extended loan was £70.

 

[Kies]

I leased a £1000 bike last year. They offered me the bike at £250 last month. I refused that offer and paid £70 for another 3 years of use. It will cost me £1 in 3 years time.

 

[fudgepanda]

Thanks for your replies folks. They sort of answer my question in a roundabout way. The figures seem to add up but I don't know why. It seems that all bikes are estimated as having a value of 25%. So that's the £250 accounted for. You were both offered your bikes for £70 which is where the 7% comes into play but I still don't know how the arithmetic works.

Still, it looks as if I'll have to stump up £56.

Now then, the shop where I bought mine from has a very nice Bianchi Via Nirone 7 with full Campag gearset

 

[BSRU]

To take ownership of the bike you need to pay 25% of the purchase price, so £200.
The 7% quoted by others is to extend the rental for three more years, and the end of which the bike is yours with no more to pay.
Once the first year is completed you can apply for another C2W voucher, irrespective of buying the bike outright or extending the rental for three more years.

 

[fudgepanda]

So, and I'm sorry to sound really thick here, but if I pay 7% of the original price (say 7% of £800) next month - 1st - anniversary, that's it then. I don't really see why anyone would want to pay the full 25% now, unless of course the intention was to part exchange the bike for another.

What's not to like?

 

[Kies]

Exactly. So pay the £70 and start drooling over your N+1

 

[BSRU]

So, and I'm sorry to sound really thick here, but if I pay 7% of the original price (say 7% of £800) next month - 1st - anniversary, that's it then. I don't really see why anyone would want to pay the full 25% now, unless of course the intention was to part exchange the bike for another.

What's not to like?

When you pay the 7% you still do not technically own it, although in reality you do, the 7% is actually a deposit for the three years. At the end of the three years you can give the bike back and get your 7% back or just keep the bike.

 

[fudgepanda]

Exactly. So pay the £70 and start drooling over your N+1

Just wiping the saliva stains from my trousers.....God I hope they're saliva..............

Oh, and thanks everybody, I finally get it.

 

[Maylian]

Since you don't technically own the bike if you extend the contract are you allowed to enter into a new contract for the N+1?

 

[BSRU]

Since you don't technically own the bike if you extend the contract are you allowed to enter into a new contract for the N+1?

Yes, I have done so.

 

[helston90]

You'd better be- I'm already planning my n+1 for when my anniversary comes up in January- something which has got '105' in the title I think it may have to be.

 

[glasgowcyclist]

I've done a search of the site looking for this answer, but come up empty handed so......

Next month will be the 1st anniversary of me entering the Cycle to Work scheme and I've been looking at their website but the answer I've found gives me more questions, so I'll write what I think it is and then feel free to tell me I'm an idiot while pointing out why.

I got my bike in September last year, and it was about £800 including bits & pieces. As I understand it, the FMV (Future Minimum Value) would be calculated as being 25% after 12 months. £800 X 25% = £200. As it was in the over £500 category, it would seem that it's rated in the higher (7%) group. Therefore, £200 X 7% = £14. After 18 months it would be 21% and after 2 years the figure would be 17%.

So does anybody know if that's it? I pay £14? Can't be surely, it all sounds so simple.

Or should that read TOO simple?

I don't know why you're taking 7% of 25% of the value as your Fair Market Value payment.
This is the simplified valuation table and I have put the figure you would have to pay thus (*£xx):


(*£ = your payment for a bike @ £800)

• 1 year 25% (*£200)​
• 18 months 21% (*£168)​
• 2 years 17% (*£136)​
• 3 years 12% (*£96)​
• 4 years 7% (*£56)​
• 5 years Negligible 2% (*£16)​
• 6+ years Negligible Negligible​

See HMRC guidance.

GC

 

[DCLane]

I'm at the same point next month - and am looking at a Cyclo-cross or MTB for the £1k limit this time, which must be from Edinburgh Cycles.

The final payment on the £499.99 Spesh Globe Daily 2 Step-thru is £13

 

[Devonshiredave]

I'm a bit bemused by the C2W scheme. I entered a 12 month contract and picked up a really nice Moda Bolero (£999). My payments have been £69.36 per month. Overall total, £832.32. If I bought the bike at 25% (£249.75), I will have paid £1082.07. Now maybe I've not understood something correctly, but isn't this supposed to save you some money? Or have I saved the money in the contributions I haven't paid to HMRC as this is salary sacrifice?
Either way, I'd pay the three year payment.