Cycle to work scheme - final payment

PeteW

Hi,

I got my company to sign up to the ride to work scheme which they'd not run before so it's all a bit new to us. Apparently once you've made all the monthly payments you have to make a final payment to actually 'buy' the bike which should be a 'fair value' of the bike in it's condition.

To anyone that has done this recently how much did you end up paying and how did that relate to the original price of your bike.

Cheers

Pete

Green.Lander

what agreement did you sign? check with HR. It is normally a set value based on HMRC rules and includes the cost of the bike x tax band x lenght of ownership - in my case around £39

AirlieBird

Until August last year it was typically 5% of the original price plus VAT. However, HMRC wised up to this and it now has to be based on a percentage set by HMRC as in the table in this link.

To avoid paying these amounts with some organisations you can sign an "extended user agreement" with the organisation your employer chose for the cycle to work scheme. This effectively transfers ownership of the bike to the scheme in return for the fee that you would pay at the end of the agreement up front. You pay nothing further and at the end of the agreement the bike transfers to you. This avoids you having to pay the high market valuations HMRC attribute in the first couple of years. Details here

Yorkie1

The rules changed after I'd taken out the HP (Sept 09) and before the agreement ended (Mar 11). I actually felt as though it was a rip-off when I added up what I'd paid over the 18 months plus the final amount. It came to quite a bit more than the overall cost of the initial voucher.

It is possible that, basically, it cancelled out the savings made during the scheme on tax / NI, essentially making it a sort of interest free loan. Which, if that's what I'd signed up for, would have felt OK. But I signed up to actually make savings and I am in no way convinced that after 18 months I came out at all on top.

http://www.guardian.co.uk/money/2010/aug/13/cycle-to-work-scheme-tax

The actual final amounts are worked out according to the length of the HP period and the initial voucher amount:
http://www.hmrc.gov.uk/manuals/eimanual/eim21667a.htm