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Cycle to work scheme
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# 1
Sponge
Old 05-08-2009, 9:32 PM
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Default Cycle to work scheme

My employer has just signed up to the scheme and I wondered if anybody had any experience of it?

I'm tempted, but put off by what happens at the end of the loan period.

Quote:
What happens at the end of the loan period?

Most employers opt to sell you the bike and accessories, and you will pay the fair market value; this is the amount that a buyer would pay to a seller to purchase the bike and equipment. Each bike is assessed separately, but in our experience the market shows values to be around 5% of the original voucher value plus VAT. The fair market value cannot be stated before or during the scheme as this could be considered a benefit in kind as hire-purchase does not warrant any tax-relief.
If the 5% is accurate, then it'd be worth while buying a bike. But if it isn't, then I'd be better off just using my employer's other scheme, which is a simple 12 month interest free loan of up to 500,repaid monthly from my salary.
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# 2
Pew Pew Pew Lasers!
Old 05-08-2009, 9:42 PM
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Depends how much you're spending. A 300 bike will be worth nothing after a year. A 1000 bike will be worth easily 500 after the same period.

Regardless of this, I'd use the scheme, and not the loan.
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# 3
Sponge
Old 06-08-2009, 10:07 AM
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Quote:
Originally Posted by Pew Pew Pew Lasers! View Post
Depends how much you're spending. A 300 bike will be worth nothing after a year. A 1000 bike will be worth easily 500 after the same period.
Exactly. So buying a decent bike, i.e. over 500, would be better financed with the 12 month loan as it is bought and paid for and belongs to me at the end. Whereas using the cycle to work scheme would mean the bike is rented over 12 months and then paid for again in order to keep it, potentially costing more than the bike was in the first place!

Example, a 750 bike would be (net) 37.50 pm for 12 months = 450. Say it's worth 350 after 1 year => 450 + 350 = 800, which is more than the bike cost in the first place. Furthermore, if I got the loan from work I could walk into a shop with cash and probably pick up the 750 for a lot less.

It all hinges on how employers calculate the market value after 1 year. Which is why I was hoping someone here has some actual experience of using the scheme. I know it'll vary, but it'll give me an idea on whether it's worth the gamble. (Employers aren't allowed to tell you in advance how much they'll want for the bike at the end.)

Last edited by Sponge; 06-08-2009 at 10:20 AM.
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# 4
MenstrieBen
Old 06-08-2009, 11:21 AM
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because of the tax break that is offered they are not allowed to tell you up front about buying the bike at the end - it is very unlikley that the final charge will be any more than the 5%+vat

the fair market value for tax puropses that you will be charged is very different to a 2nd hand value (tax usually lets you depreciate goods at a high rate)

for thescheme that i have used at the end of the 12 months i had a choice of buying a 1000 bike for about 50 or paying the same ammount for the company to take it and dispose of it..... a no brainer really
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# 5
AirlieBird
Old 06-08-2009, 11:28 AM
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The bike is worthless to the employer at the end of the year so they will sell you it for a nominal sum, usually around 5% of the original price. There's this site which says it's unusual for it to be more than a month's payment.

Quote:
Your employer may have the opportunity to sell the bicycle and equipment at the end of the scheme at fair market value. The fair market value cannot be stated before or during the scheme as this could be considered a benefit in kind and would therefore not attract any tax-relief. In our experience it is unusual for fair market value to exceed the amount of one month's salary sacrifice.
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# 6
madame cholet
Old 06-08-2009, 11:28 AM
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Hi Sponge
It sounds as though you don't yet own a bike of any type. Have you thought about borrowing one from a pal to see how you actually get on with cycling to work on a regular basis before signing up to a scheme or forking out for a swish bike? Mr Cholet cycles to work each day (about 6 miles each way) and he thinks it's great, but miserable weather is not for everyone.
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# 7
brigittejohn
Old 06-08-2009, 12:40 PM
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Default Is it really money saving?

I cycle to work every day, and we have the "cycle to work" scheme.

I have not used it for the simple reason that I do not think it would save me any money at all.
Indeed, you can only buy the bicycle from set suppliers, such as Cycle Surgery, etc... This suppliers are not the best value ones at all.
I could for example not get a bike from Halfords, or from Tchibo (where I got a good quality fold-up bike (with lights and luggage rack!) for less than 150.
Through the cycle to work scheme, I think you can get a Brompton for 500! Hardly "money saving"!

Whilst Tchibo do not sell bikes at the moment, I would advise anyone to shop around and not only look at the shops "allowed" under the "cycle to work" scheme. Even if you are under a 40% tax rate!

Hope it helps.
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# 8
Sponge
Old 06-08-2009, 12:53 PM
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Thank you all for your replies.

I do already have a bike, a mountain bike (Whyte 46), that I cycle to work on (when I want a change from running) but want something more road orientated for commuting and a bit of road-work.

I have a very good relationship with my local bike shop, who also happens to be my nearest Cycle To Work participating dealer. In the past I've been able to negotiate good discounts on all my purchases. So I'll need to have a word with them, see if the potential savings under the scheme are better than anything he can offer me for cash.

Thanks again.
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# 9
Woby_Tide
Old 06-08-2009, 1:15 PM
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The C2W agreement is normally 3 years, with the loan paid off over 1 year but check the exact terms of your agreement so it's the value after 3 years not 1(though invariably it is still 5% in most cases)

Also with regards to prices most retailers can't offer more than token discounts on the price of bikes bought under the C2W scheme as they only receive 90% of the sale price acheived in return from C2W(or whoever funds it)

From our agreement

Number of Monthly Hire Payments: 12
Timing of Monthly Hire Payments: The first Monthly Hire Payment will commence in April 2009, and
will continue on normal salary payment dates thereafter.
Termination Fee: On termination of this Hire Agreement upon your ceasing
employment with xxxxxxx you will have to pay a termination fee
of an amount not exceeding the outstanding Monthly Hire
Payments.
Hire Period: 36 months from the date of this Hire Agreement.

And ffrom the terms

The Selection will be disposed of at the end of the term of this Hire
Agreement for a nominal sum, equating to fair market value at that
time usually 20 (plus VAT) or 3% of the capital value (plus VAT)
whichever is greater.
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# 10
gilligansyle
Old 16-09-2009, 8:36 AM
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Quote:
Originally Posted by brigittejohn View Post
I cycle to work every day, and we have the "cycle to work" scheme.


I could for example not get a bike from Halfords, or from Tchibo (where I got a good quality fold-up bike (with lights and luggage rack!) for less than 150.
Through the cycle to work scheme, I think you can get a Brompton for 500! Hardly "money saving"!



Hope it helps.
Our company has cycle2work and you get a voucher to take to Halfords, you choose in values of 50 how much you want to spend. As yet nobody has been charged to keep the bike at the end of the period.
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# 11
Dogs Trust
Old 16-09-2009, 8:54 AM
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We at Dogs Trust use the Evans ride2work scheme. You pay over 12 months back to the org and after 12 months the org can transfer the bike to you for a nominal fee. (its really has been nominal llike 10) It worked out well for me, cheaper bikes are all well and good (and I've had a few) but for longer distances and when you ride everyday through all weathers it really makes the difference to have something with a bit of quality. I saved about 170 on my bike and pay 21 a month for it pre tax. I could never afford a bike of that price in one go. Previously I've had Halfords and other cheaper bikes, that only lasted 18 and 12 months respectively.

I guess it all depends on what you want it for. A terms of our agreement is we have to use them for over 50% of travel for work in the year. So if you are a fair weather cyclist then maybe its not really for you.
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# 12
BillScarab
Old 16-09-2009, 9:04 AM
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They've just introduced it where I work. It's definately only a one year scheme not three years. Although we don't know yet what the final fee will be the chances of it being more than 5% are tiny.

It's a good scheme particularly for higher rate tax payers.

Remember it's not just bikes you can buy. When you buy your bike you can also buy accessories like helmets, clothing, tools, lights etc.

Yes you can buy much cheaper bikes outside of the scheme but they won't be good quality bikes and if you're going to ride it regularly you want a decent quality machine.
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# 13
headcoat
Old 16-09-2009, 9:32 AM
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Just get a good second hand one off ebay. I got a year old 400 bike for 200 including Cateye lights and crud catchers.
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# 14
Gambit
Old 16-09-2009, 10:36 AM
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Thumbs up Halford Cycle to Work Scheme

We have a Halfords Cycle to work scheme at work but I was not happy going to Halfords as they didnt always have the best choice. Instead I found another store (Action Bikes) who accepted the vouchers and I managed to get the bike I wanted (Marin Larkspur) which worked out to be 400. But with our scheme it's a taxable benefit so it actually costs about 300 over the 18 months that our scheme runs for. What's more, its basically an interest free loan as instead of paying hundeds for a bike now, you get it taken from your pay bit by bit but still get the use of the bike from today.

Worth it in my opinion!
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# 15
davetrousers
Old 16-09-2009, 10:44 AM
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I used the Cycle2work scheme to get a bike.

There was no list of 'approved' suppliers, you just did your own research and said that one please.

Because the Company is buying the bike for 'work purposes' there is no VAT (iyswim), so the bike costs less in the first place. You then 'hire' the bike from your employer from your gross salary. Then at the end of the 'hire' period you buy the bike for a nominal sum.

This works out at almost a 50% discount. An interest free loan doesn't even come close.

I am not sure why a company would specify where you must get the bike from. The Cycle2work scheme certainly doesn't dictate where you should get it from!
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# 16
MoveOver
Old 16-09-2009, 10:57 AM
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Default Cycling Tip

Winter or summer a cyclist can get wet. I tried several cycle capes until I found one that would fit over handlebars and rucksack. Then used an old ramblers trick by placing spare battery packs on the four bottom corners folding them inside the cape and securing with a rubber band. The weight of the batteries keeps the cape from blowing up. Spare Batteries are then always available. I also use one of those climbers headset lamps so that I can see where I am looking at night.
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# 17
cowbutt
Old 16-09-2009, 11:03 AM
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Quote:
Originally Posted by Sponge View Post
My employer has just signed up to the scheme and I wondered if anybody had any experience of it?

I'm tempted, but put off by what happens at the end of the loan period.

If the 5% is accurate, then it'd be worth while buying a bike. But if it isn't, then I'd be better off just using my employer's other scheme, which is a simple 12 month interest free loan of up to 500,repaid monthly from my salary.
I used my employer's cycle to work scheme. Their wording was very similar to your employer's, and they automatically charged 5%+VAT to buy the bike on the 13th month.
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# 18
cowbutt
Old 16-09-2009, 11:06 AM
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Quote:
Originally Posted by headcoat View Post
Just get a good second hand one off ebay. I got a year old 400 bike for 200 including Cateye lights and crud catchers.
If you're eligible for a cycle to work scheme, you can get a new bike and accessories effectively discounted at the highest rate of tax you pay.
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# 19
cowbutt
Old 16-09-2009, 11:09 AM
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Quote:
Originally Posted by brigittejohn View Post
I cycle to work every day, and we have the "cycle to work" scheme.

I have not used it for the simple reason that I do not think it would save me any money at all.
Indeed, you can only buy the bicycle from set suppliers, such as Cycle Surgery, etc... This suppliers are not the best value ones at all.
That's down to your employer's implementation, rather than the scheme in general. My employer simply required an invoice for a bike and accessories. Try having a word with HR.
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# 20
tourdefrancis
Old 16-09-2009, 11:20 AM
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Why does the bike to work scheme expect me to buy it back off my employer at the end of the scheme when i have been paying for it out of my salary.....surely its my bike?
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