Cyclescheme: advice needed - end of hire early

Icepops

Hi,

I left my company half way through the hire scheme so had to pay the rest of the scheme in one lump sum out of my last paycheck.

I am now being told that I either need to extend my hire agreement by 3 years for £69.93, take full ownership for £250 or give the bike back.

If I had stayed with my company, I would still have had 6 months left of the hire scheme with money sums coming directly out of my wages. I would have thought that paying the lump sum (missing out on tax free benefits) would still entitle me to be enrolled on the scheme until the end of the year as I have technically paid for this however this seems to not be the case.

This means that I have ended up paying close to £1k to 'hire' the bike for 6 months which seems extremely costly and looking at other related posts, people have not been contacted until the full year of the hire scheme has lapsed.

Not sure what to do now. Am I still entitled to keep the bike with no further action until the end of the originally agreed scheme?

Would be extremely grateful for any advice regarding this topic.

Many thanks

Enterprise_1701C

I assume you have actually told them that you paid the 6 months to the company? Has the company you used to work on actually passed that on to them?

liz545

If I've understood the Cycle Scheme website correctly, the monthly payments don't actually buy you the bike - even after a year's payments you're still 'hiring' it from your employer, so paying the lump sum still leaves the issue of the end of hire period. As HMRC have tightened up the rules, if you want to buy it outright you have to pay 25% of the bike's value (the £250 quoted). Alternatively, you can pay 7% deposit to extend the agreement for a further 3 years, you don't make any further repayments, and at this point Cycle Scheme will offer the bike to you.

If you'd stayed with your employer you'd have been able to keep paying in instalments, but the end of scheme payment you'd have to make would be the same. Because HMRC have made the scheme rules tighter, the only real benefit now is being able to pay in instalments, effectively you don't get much of a discount any more.

dotdash79

Of course the other benefit is that you you pay no tax or NI on the repayments

liz545

Apologies for the thread hijack, but I've also been looking into the Cycle to Work scheme, and I've got conflicting information on the end of hire period. My (large) employer participates in the scheme, and they've told me that they are not currently processing any transfer of ownership payments, so at the end of the 12 months, there are no further repayments to be made. Can this be correct? This would substantially increase the value of the benefit to me. Are employers obliged to charge for transfer of ownership, or can they just sign the bike over to the employee gratis?

dotdash79

Ours is managed by Evans cycles and we have the option to return the bike, pay the fare market value or transfer the bike to Evans and then you lease it for 60 months for free.

http://www.evanscycles.com/ride2work/transfer-of-ownership-options

Swampy3k

I got this a 2 years ago, my bike was roughly £350, I made the 12x monthly payments which totalled £350 and expected it to be done as I figured it was a 0% finance deal type thing where it was actually HELPING people to get a bike, however as Liz has said on the 12th month they asked for a further payment for me to keep the bike or if I paid nothing I had to hand it back. Found it to be an absolute con, but didn't want to part with the bike so parted with more cash to get it, in reality it would have just been cheaper to buy the bike outright at the start.

flea72

Yes the payments you make equal the value of the bike, but you will have paid less tax and NI, so that is where you are making the saving

If you add up the lower rate of tax and NI that you paid, it equates to a saving of about £100 on a £350 bike

The biggest savings kick in if you own the bike for 4+ yrs as the end disposal price is then minimal. Its only if you buy the bike within the first 18m, where the savings in tax/NI get wiped out, due to the market value of the bike

Nice employers are prepared to pass on the tax/ni savings they make from the scheme, so the employee doesnt have to pay such a large fee at the end.

Terms were more favourable in the early days of the scheme as there wasnt a defined disposal valuation, so employers did ask for nominal amounts, since most didnt know the value of a used bike. Think I paid about £15 settlement on a £1k bike, whereas now it would be £200