Cycle Scheme Advice

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bigrichprice
bigrichprice Posts: 6 Forumite
in Public transport & cycling
Hi,

I'm after a bit of advice, I took out a cycle scheme last year and as far as I thought everything went fine. I've just resigned my position to take up a better offer elsewhere. HR have just contacted me to say that they've made a mistake and haven't been taking the payments out as expected.

I was expecting them to take a little but out of my final pay as there were a few months left. However they're informing me that they're going to take out the full amount of the bike from my final pay packet. £458 from gross and £229 from net.

This is obviously quite a lot of money and I cannot afford it. they're not being particularly helpful. Has anyone been through similar or have any advice?
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Comments

  • fred246
    fred246 Posts: 3,620 Forumite
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    It sounds like they are probably following the terms and conditions of the agreement that you have probably signed. Nasqueron will probably be along soon to say what a good scheme it is.
  • Nasqueron
    Nasqueron Posts: 8,825 Forumite
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    fred246 wrote: »
    It sounds like they are probably following the terms and conditions of the agreement that you have probably signed. Nasqueron will probably be along soon to say what a good scheme it is.

    The terms and conditions of cyclescheme are very clear before you sign up that if you lose your job or move job then you pay off the remainder of the loan in full without the tax saving element.

    The fact the company haven't been paying it is a mistake but hardly the fault of the cycle scheme company - it's the firm that has paid for the bike. OP would do better raising this with the firm and coming to an agreement especially if they have had the deduction from their salary meaning they should at least have a start point to argue they shouldn't pay the whole sum without tax saving (though if they weren't having the deductions then they do take some liability for not flagging it!)

    Cyclescheme FAQ
    What happens if I leave employment?

    If you leave employment or are made redundant during the hire period any outstanding Salary Sacrifice repayments will be taken from your final salary, from net rather than gross pay i.e. without any further tax exemptions.
    For example, if you are on a 12 month scheme, and have had 4 Salary Sacrifice repayments taken from gross salary prior to leaving employment, the remaining 8 should be taken from your final net salary.
    If applicable, you may then be offered ownership of the equipment in the normal way (please refer to ‘End of Hire').
    Please note: It is not possible to transfer the agreement from one employer to another.

    Cyclescheme is a great way to get a bike with a big saving (especially now you can do more than £1000 - you just don't get tax saving on anything over that), the only people who don't like it don't understand how it works
  • Mr_Singleton
    Mr_Singleton Posts: 1,891 Forumite
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    Nasqueron wrote: »
    Cyclescheme is a great way to get a bike with a big saving (especially now you can do more than £1000 - you just don't get tax saving on anything over that), the only people who don't like it don't understand how it works

    Rubbish. I know how it works and I don't like it even as a high rate Tax payer.

    I'd advise people not to touch cyclescheme with a barge pole.
  • Nasqueron
    Nasqueron Posts: 8,825 Forumite
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    Mr_Singleton wrote: »
    Rubbish. I know how it works and I don't like it even as a high rate Tax payer.

    I'd advise people not to touch cyclescheme with a barge pole.

    What specifically is wrong with it (providing details and examples) and how would you suggest someone gets the bike?

    For a commuter bike with a tax saving element that results in 30-40% off the bike price and up to £1000 to spend on bike and accessories it cannot be beat. Sale bikes can be included as can old models and ex-demo (the only reluctance comes from the shop if they have done a big mark down that means with the cyclescheme commission it would make them a loss)
  • Mr_Singleton
    Mr_Singleton Posts: 1,891 Forumite
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    Nasqueron wrote: »
    What specifically is wrong with it (providing details and examples) and how would you suggest someone gets the bike?

    Obviously the OP shows one of the cons.... leave the company and you'll be required to pay for the bike in full losing all of the supposed benefits out of your final pay packet. If there isn't enough money then you'll have to make up the short fall or the company is in it's rights to take the bike back despite all your previous payments.

    Good, you've mentioned cyclescheme's commission..... it's 10% btw as it's not a charity but a 'for profit' company. Again you're correct there's nothing to stop cycle shops offering discount cycles in the scheme but they don't. I've been in shops when people have asked and the answer has been "we only allow it for use on full price bikes". A friend said he'd been to 10+ shops and not 1 would accept cyclescheme on any discount bikes only RRP. Go take a look at the sale at Winstanley bikes (google it) Cracking bikes i.e. Pinarello, Bianchi Colnago etc with 30-40% plus off.... CycleScheme NOT accepted.

    Another thing I bought a new cycle helmet in October it cost £175. If I'd bought it via CycleScheme it would have cost me £210 as I'd have had to pay VAT on it. is the VAT you pay on zero rated helmets factored in?

    Salary sacrifice affects how much you could borrow i.e. mortgage or loan, might even effect some benefits and your employee pension.

    If you want a bike get a discounted last years model and stick it on an interest free credit card.
  • Nasqueron
    Nasqueron Posts: 8,825 Forumite
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    edited 5 February 2016 at 9:56PM
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    Whelp it's just as I said in my first post, the only people who think it's a bad scheme don't understand it as you proved.
    Mr_Singleton wrote: »
    Obviously the OP shows one of the cons.... leave the company and you'll be required to pay for the bike in full losing all of the supposed benefits out of your final pay packet. If there isn't enough money then you'll have to make up the short fall or the company is in it's rights to take the bike back despite all your previous payments.

    WRONG - as per the Q&A I posted above, you pay back only the REMAINING balance without the tax bonus so any savings you have made already are fine. That's upfront in the terms and conditions and is standard with any discretionary benefits of employment, it's not a reason not to use it as you still save unless you left your job in between taking the bike and your first payment
    Mr_Singleton wrote: »
    Good, you've mentioned cyclescheme's commission..... it's 10% btw as it's not a charity but a 'for profit' company. Again you're correct there's nothing to stop cycle shops offering discount cycles in the scheme but they don't. I've been in shops when people have asked and the answer has been "we only allow it for use on full price bikes". A friend said he'd been to 10+ shops and not 1 would accept cyclescheme on any discount bikes only RRP. Go take a look at the sale at Winstanley bikes (google it) Cracking bikes i.e. Pinarello, Bianchi Colnago etc with 30-40% plus off.... CycleScheme NOT accepted.

    Entirely up to the bike shop and fairly logical as bike profits in the lower end are small so a 10% cut on top might mean making a loss, doesn't validate your anecdotal evidence fallacy however. Moreover, now you can top up the voucher this more than outweighs this silly comment. Further to that, discounted bikes are end of season so you could get a new one on the scheme for the same price.

    Example:
    Specialized Allez 2015 - great starter bike RRP £600, discount to £450
    Specialized Allez 2016 - same spec, £600

    Put the new one through C2W - bike is £408 - add on the £42 7% deposit at the end (not all schemes do this by the way) and it's £450 so you have the new bike on the same price as last year's sale.

    Oh and why don't YOU google Paul's Cycles - they DO accept cyclescheme up to £900 due to the commission and stock Cannondale, Cube, Giant, Scott etc
    Mr_Singleton wrote: »
    Another thing I bought a new cycle helmet in October it cost £175. If I'd bought it via CycleScheme it would have cost me £210 as I'd have had to pay VAT on it. is the VAT you pay on zero rated helmets factored in?

    Most normal people don't buy £175 helmets, if you're spending that much money you're probably not looking to buy a £1000 commuter bike so hardly relevant.
    Mr_Singleton wrote: »
    Salary sacrifice affects how much you could borrow i.e. mortgage or loan, might even effect some benefits and your employee pension.

    If you want a bike get a discounted last years model and stick it on an interest free credit card.

    For one year, you might have a small effect on your maximum loan because you're paying back £1000 for a bike. In your credit card example, you have £1000 of debt which will logically also affect your payment.

    So to reiterate -

    You don't know how the scheme works, your examples are wrong (or irrelevant) and your CC suggestion gets you an older bike and saves you precisely nothing (and requires you to apply for a credit card which will obviously affect your loan/mortgage application.

    As per my previous post
    the only people who don't like it don't understand how it works
  • fred246
    fred246 Posts: 3,620 Forumite
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    From the cyclescheme website

    https://www.cyclescheme.co.uk/help/faqs/employer-faqs

    How does Cyclescheme work?

    You (the employer) buys the bikes and/or accessories at full retail price.

    When I was looking at the scheme our employer told us to buy from Halfords. The lock I bought was £90 in Halfords, £56 on Amazon.

    If I used the salary sacrifice scheme it would reduce my pension. So I could have a 2016 bike instead of a 2015 bike and every month of my retirement (which could be over 45 years) I would receive less. Doesn't make any sense to me.
  • Moto2
    Moto2 Posts: 2,206 Forumite
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    Some bike retailers also want an 'admin' charge to use the schemes.
    Planet-X for example

    An admin fee of 10% applies with cyclescheme.co.uk, On Your Bike and Bike2work vouchers, as well as Salary Extras. A 12% fee applies with Cycle Plus vouchers and a 12.5% fee applies with the NHS SME HCI scheme.
    We keep our prices competitive by selling at very low margins. All of these third-party organisations charge us a fee on each bike we supply to a customer for administering the scheme on behalf of your employer. We pass this exact charge on to you without adding anything extra ourselves. We'd love not to have to pass these charges on, but our margins are simply too low to absorb them. The additional charge DOES NOT APPLY if an employer is paying us directly for the bike.
    Change is inevitable, except from a vending machine.
  • Mr_Singleton
    Mr_Singleton Posts: 1,891 Forumite
    edited 7 February 2016 at 11:18AM
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    Nasqueron wrote: »
    Whelp it's just as I said in my first post, the only people who think it's a bad scheme don't understand it as you proved.

    Your argument in favour of this scheme is a lot like daytime TV adverts by payday lenders.... all happy smiling faces, jingly music and bright colours oh and all the inconveniant stuff like the 2000% APR etc either not mentioned or hidden in the tiny print flashed up on screen for all of 2 seconds.

    You brush away the fact that you're required to pay VAT on a zero-rated bike helmet (worth £50 or £175 whatever) without acknowledging that it makes you worse off.

    As I originally mentioned and now fred246 that because of salary sacrifice you will pay less into your pension as will your employer. So decades after the bicycle went to the dump you'll still be paying for it from the moment you start collecting your pension to the day you die in the form of a reduced pension.

    You keep banging on about there being nothing to stop retailers offering discounts on these schemes but refuse to accept that in practice they don't even on £1000 collection letters.

    You refuse to accept the risk your taking in not owning the bike i.e if the bike is stolen or written off, you leave the company you'll have to pay whatever's outstanding in full based on the full purchase price from NET salary. The OP is a case in point. You can't sell the bike not to mention what happens if your employer goes bust. If you bought a bike on one of these schemes today then you wouldn't own the bike till 2020!

    You say that last years model of the Specialized Allez (2015) is £450 but a quick google shows that you can buy one for £399. The shop I spoke to hinted that they'd do 20% on accessories if I bought it. The difference between that and the 2016 version is the colour and only the colour. It's also possible to get a discount on a new 2016 version if you don't like the 2015 black & red and prefer the 2016 puke green. I was offered 20% of the bikes price (£120) as vouchers towards accessories or 10% cash discount.

    So I'll say it again, when you look at all of the facts good and stop ignoring the bad then these cycle schemes so called saving are marginal at best but you have a number of pretty big pitfalls if your sunny blue sky, happy clappy view on life isn't matched by reality.
  • Mr_Singleton
    Mr_Singleton Posts: 1,891 Forumite
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    Moto2 wrote: »
    Some bike retailers also want an 'admin' charge to use the schemes.

    I'd say they're adding transparency. You can employ a middle man for a 12% charge or you can do it yourself and not pay 12%.

    As I've already pointed out the savings are marginal through these schemes and you have to accept a whole truck full of risk not to mention a smaller pension for life.

    You're call!
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