Cycle to work scheme

iloverobots

The whole scheme is just a massive tax hole. The Government havent actually changed anything, they have just found a path through the paper work that allows companies to buy bikes and rent them to their employees with the idea that they will pass the bikes onto their employees at the end of the rental period.

Your employer can go into ANY bike shop with you, buy you a load of stuff up to £1000, claim back the tax in the normal way and then charge you the rest from you gross salary based on a 12-18 monthly payments. You save money by not paying VAT, NI or tax on this money, and your company saves money by also not having to pay NI on it.

The company then has the 'option' to sell you the bike at 'Fair Market Value' which is normal 5% of the original cost, from your net salary. This is VAT chargable.

The only thing the government has done is to created a 'group consumer license' allowing a group of people ie us, the people of GB, to rent bicycle equipmet from our employers. However for this agreement to be within the law, the rental agreement between you and your employer has to be a 'rental agreement' and not a 'purchase rental agreement', and hence why you have to buy the bike at the end. Its not so the employer makes money, its just so that the tax loop isnt breaking the law. The employee is also not allowed to promise you or tell you in anyway that you will get the chance to buy the bike till after the contract is up for the same reason.

Your company doesnt dont actually need to sign up to any scheme, or even inform anyone. Signing up to a scheme helps bigger companies as there is less paperwork for them, but if your small, you know the boss and you can presuade him and someone with a company credit card then your sorted.

You also dont have to tell the bike shop, as long as they are concerned your just any old customer which is beneficial to you because you can bargin - they are unlikely to do a deal for you if they know your getting a bike through work as your already getting a massive discount!

The way we run it a work is:

1)You go to the shop, bargin a good price for what you want under a £1000, pay the extra if there is any ie pay £500 if the total is £1500, and get a quote for the rest.

2)Take the quote into work, inform whoever pays the bills, and arrange for them to pay for the outstanding amount, either by credit card, cheque etc.

3)Go pick up all your stuff.

4)Pay the outstanding money less VAT from your gross salary, monthly over 12 months. The 13th month they tell you they want to sell the bike and they take the 5% out of your Net Salary.

Hope this helps. Bit long isnt it....

yathers

Hi, I work for bury council and they run the biketowork scheme. Ive bought a bike work £950 and with my scheme we repay over an 18month period. The thing is my payments each month are £53.13 which x by 18 =£956.34. Thats more than the bikes worth!!!! Where ar emy savings, ive contacted the company, but they insist the payments are correct??? Im totally confused with this. I personally think I should be paying it back over 12months, but they say it is 18, my contract also states this. Were do my savings come from and how can the payments total more than the bikes worth????? HELP PLEASE

custardy

yathers wrote: »

Hi, I work for bury council and they run the biketowork scheme. Ive bought a bike work £950 and with my scheme we repay over an 18month period. The thing is my payments each month are £53.13 which x by 18 =£956.34. Thats more than the bikes worth!!!! Where ar emy savings, ive contacted the company, but they insist the payments are correct??? Im totally confused with this. I personally think I should be paying it back over 12months, but they say it is 18, my contract also states this. Were do my savings come from and how can the payments total more than the bikes worth????? HELP PLEASE

£956 before tax?

flea72

try this

http://www.cyclescheme.co.uk/employee,calculator.htm

have you also bought accessories as part of the scheme, and thats where the additional costs have come from?

F

molerat

£53.13 off your gross pay before tax and NI is deducted.

flea72

your monthly payments shouldnt really total more than the net cost of the bike

if an employer charges exorbitant admin and finance fees on top, then this could have put up your monthly payments, but as yet, most employers are happy to use the savings they make in reduced tax/ni to offset against any costs incurred as part of the scheme

Im assuming you are doing the scheme over 18m, so your wages dont drop below min wage levels?

F

yathers

Yeah, i did buy an accessory, a pump for £25 taking the total to 949.99. Like I say if you add my £53.13 x 18months up the repayment is more??? Only £6/7 but still more???

Its payed over 18 months, but not to make sure im on min wage, im a secondary school teacher on £30,000+ so I dont really understand it???

Anyone with ideas???????
Oh, its the onyourbike scheme im on with, cheers.

molerat

You have been given the correct answer to your query by two of us.

custardy

yathers wrote: »

Yeah, i did buy an accessory, a pump for £25 taking the total to 949.99. Like I say if you add my £53.13 x 18months up the repayment is more??? Only £6/7 but still more???

Its payed over 18 months, but not to make sure im on min wage, im a secondary school teacher on £30,000+ so I dont really understand it???

Anyone with ideas???????
Oh, its the onyourbike scheme im on with, cheers.

you make your payments before tax
so you are not paying tax/NI on that £53.13
so in real terms you are not paying that figure after tax
thats where the discount comes from
did you not look how the scheme works?

flea72

yathers wrote: »

Yeah, i did buy an accessory, a pump for £25 taking the total to 949.99. Like I say if you add my £53.13 x 18months up the repayment is more??? Only £6/7 but still more???

Its payed over 18 months, but not to make sure im on min wage, im a secondary school teacher on £30,000+ so I dont really understand it???

Anyone with ideas???????
Oh, its the onyourbike scheme im on with, cheers.

could it be that schools are not VAT registered? which would result in you paying full price for the bike, therefore the only savings you are making are your reduced tax/ni, which equates to roughly £200 off the price of the bike (if they are VAT registered it would be about another £100 saving on top)

F