Cycle to work scheme

Nick_o_las

Hi

I'm a bit confused by the new VAT rules being introduced on the cycle to work scheme so wanted some advice.

I'm planning to buy a bike for £399.99 but I have a voucher for 10% off at the shop in question. The shop won't allow the voucher to be used in conjunction with the scheme. So my question is: will I save more using the 10% voucher or using cyclescheme?

When I used Cyclescheme before I remember I saved nowhere near what their online calculator suggested, so I'm worried that with the new VAT rules the saving will be negated completely.

Thanks in advance
Nick

Ghostrider

I didn't think the cycle to work scheme had anything to do with VAT, I thought the savings were dependant on your income tax band? Although potentially your employer can choose to pass on the VAT savings they get from the scheme...someting like that anyway.

I've done it a number of times actually and all I know is that i've got a £1000 (on both occasions) for an awful lot less!

Have a look here, very handy FAQs

http://www.cyclescheme.co.uk/employers/employer-faqs#/getting-a-bike/faqs/whats-the-process-of-getting-a-tax-free-bike-fo

HAD29

Haven't looked into exactly how it worked, but I got a £600 bianchi mountain bike, for about £200 or £300 (ish) (can't remember what) by not having to pay 40% income tax on £600 of my salary. Great buy as wife would NEVER have allowed me to spend that much on a bike otherwise.

Ghostrider

That sounds about right, I got a £1,000 bike and it cost be just under £600 as I remember.

To the OP, I didn't answer your question very well. To try again, it depends on your personal tax bracket, but if you're a 40% tax payer you're likely to save somewhere in the region of £100-120 on a £300 bike according to the calculator, whereas a 10% voucher will entitle you to £30 saving on that bike..

However, if it were me and you have the cash to spend rather than using the C2W scheme, I would shop around and see if you can get a last year model, as the previous years and sometimes the year before that can be had for absolute bargain prices for very well specced bikes. Evans is a good bike shot to try if you have one near you.

Also, secondhand bikes are a bargain too, as bikes tend not to hold their value much, so thats another option always worth considering if you're not a new bike snob

Either way, have a look about and way up the pros and cons of each option.

highhorse_2

Don't forget though that even after you make the final payment on the bike through your employer, you still dont actually own the bike.

Its still the possession of the employer.

It used to be that your employer could define a nominal fee to buy the bike out right (normally 1 months repayment). But the government came down quite hard on this last year and I think they have "suggested" a minimum - that would virtually wipe out the savings.

Quite a few of us fell into this trap last year with our employers. So we have all threatened to hand them back our bikes (about 120 in total) and see them deal with trying to sell them. They eventually agreed to "turn a blind eye" on the situation and let you keep the bike unofficially

Dorisx

You'll DEFINATELY save more with the cycle to work scheme in my opinion. I have just bought a bike on the cycle to scheme work, I spent £355 and only paid £295 due to the VAT being excluded ... almost 20% off! Not bad in my opinion .... Definately worth lloking into the ycle to work scheme properly, best thing I ever done regarding transport in my opinion! :-)

custardy

Dorisx wrote: »

You'll DEFINATELY save more with the cycle to work scheme in my opinion. I have just bought a bike on the cycle to scheme work, I spent £355 and only paid £295 due to the VAT being excluded ... almost 20% off! Not bad in my opinion .... Definately worth lloking into the ycle to work scheme properly, best thing I ever done regarding transport in my opinion! :-)

"DEFINATELY" works fine on full retail like for like
however add in discounts and sale prices and its not so clear
I got a bike through C2W but I got a £150 discount on the bike so it was a no brainer

Glennn

With the tax and NI relief you get on the bike you will save about £120 assuming you are earning enough to pay tax.

The admin charge at the end of the period still applies. We have to charge 18% for bikes under £500 but......

5% is charged and the other 13% put on a P11d as a taxable benefit so you only pay the tax on that 13%

So for a £400 bike.... save £120 in tax but then pay £20 admin charge at the end plus around £11 extra in tax the next year. Means the £100 off voucher will just work out better if you don't mind paying out straight away.

Rules don't come in until Jan 11 though so if you get it before then you will save more on the scheme.

Check with your employer what the admin figures are though as some companies may not know about putting some of the charge on a P11d and just charge you the whole amount.

Ghostrider

Whats the £100 off voucher?

Glennn

Ghostrider wrote: »

Whats the £100 off voucher?

Oops..... Sorry in between reading and posting I changed it from 10% to £100

10% voucher is only £40 so go for the scheme all the way.:D

tomilinski1

I have to say I don't think its the deal it used to be, due to this final payment which is now up to 25% of the value of the bike - you can get just as good a deal by using a 0% credit card and buying a discounted bike in the Autumn sales (although obviously you won't be able to pick the exact model) and at least then you are in charge!