Cycle to work scheme help

gazza1988

Hi everyone.

I signed up to the cycle to work scheme, had my certificate approved but not issued.

On my hire agreement I will be paying £36.90 every 4 weeks (work at tesco) so in the 12 month period I will be paying back £514.80. Looks ok so far until you find that my certificate value is £479.73. I'm paying back £35.07 more over the course of the year than the original value.

Bike value £359.99
Helmet value £49.99
Accessories value £69.75

I rang cycle scheme and they said that because I had chosen to buy a helmet on the certificate it isn't included in the cycle scheme so I don't save money on that and it's extra.

In an example from work it says that someone get a cert for £400 and pays £20 per pay day (£400 divide by 13 is £30 per pay day)

HappyMJ

gazza1988 wrote: »

Hi everyone.

I signed up to the cycle to work scheme, had my certificate approved but not issued.

On my hire agreement I will be paying £36.90 every 4 weeks (work at tesco) so in the 12 month period I will be paying back £514.80. Looks ok so far until you find that my certificate value is £479.73. I'm paying back £35.07 more over the course of the year than the original value.

Bike value £359.99
Helmet value £49.99
Accessories value £69.75

I rang cycle scheme and they said that because I had chosen to buy a helmet on the certificate it isn't included in the cycle scheme so I don't save money on that and it's extra.

In an example from work it says that someone get a cert for £400 and pays £20 per pay day (£400 divide by 13 is £30 per pay day)

£36.90 times 13 is £479.70 the value if the items.

£39.60 times 13 is £514.80

Are you sure you typed the correct numbers in the calculator?

gazza1988

Yes you are right.

I am paying £36.90 but the GF had the calculator up and input the wrong numbers.

I am going to save 3p and still have to pay a final value fee of at least 5% of the value so it's gonna cost me more than the value in the end to purchase and this is supposed to save you money and not cost more in the long run.

Nasqueron

Helmets / safety gear (including lights) are included on all the major schemes.

You do lose <certificate value/12> every month from pre-tax pay normally but as it reduces the amount you earn you pay less tax and so your take home pay is not reduced as much.

In your case your certificate would be 479.73 / 13 = £36.90 (+3p).

It looks like you did 39.60*13 not 36.90*13 as HappyMJ says

Nasqueron

gazza1988 wrote: »

Yes you are right.

I am paying £36.90 but the GF had the calculator up and input the wrong numbers.

I am going to save 3p and still have to pay a final value fee of at least 5% of the value so it's gonna cost me more than the value in the end to purchase and this is supposed to save you money and not cost more in the long run.

gazza

The way the scheme works is that you lose £36.90 from your pre-tax pay, as you are "earning less" you pay a bit less tax so your take home pay is not reduced by as much, probably only see a drop of about £25 thus "saving" you about £12 a month.

Normally on the scheme you have 3 options at the end

Pay a fixed value for the bike
Pay a deposit of a small % (5% seems steep, on Cyclescheme it's 3% for bikes under £500)
Return the bike

For you:

Total value: £479.73
Reduction in income tax: £95.95
Reduction in NI: £57.57
Total cost you "pay": £326.21
Saving: £153.52
5% deposit = £23.99

Actual total cost of bike (in terms of how much your take home pay is reduced): £350.20

Thus you "save" £129.53

gazza1988

Ah, thank you for that
Considering I earn £10,759.84 a year which is £159.84 over the tax threshold It wouldn't represent that much of a saving for me, would it?

I'm incredibly confused by how it all works. It appears more hassle than it's worth and not at all how my friend explained it would work.

So from reading the replies I "lose" £36.90 per pay day but "gain" £11.80 per pay day in saved income tax and NI contributions. (IE the tax man takes £11.80 less than he would have done)

richj

take a look around you can quite often get a lot more bike when you look at last years model, and a few of the stores offer reasonable finance. I looked at the cycle scheme but since it was tightened up you don't always make the headline savings you used to.
decathlon, evans, halfords offer some great 'cheaper' bikes.

Nebulous2

It doesn't really save you very much if you are below the tax threshold. Cycle to work was a pretty good deal, but the government wrapped it in so much red tape it is now often confusing and marginal gains.

Given some retailers wont discount if it is used and some charge an admin fee you may well get a better deal in end-of-season sales.

Nasqueron

gazza1988 wrote: »

Ah, thank you for that
Considering I earn £10,759.84 a year which is £159.84 over the tax threshold It wouldn't represent that much of a saving for me, would it?

I'm incredibly confused by how it all works. It appears more hassle than it's worth and not at all how my friend explained it would work.

So from reading the replies I "lose" £36.90 per pay day but "gain" £11.80 per pay day in saved income tax and NI contributions. (IE the tax man takes £11.80 less than he would have done)

Pretty much yes

You get paid, £36.90 comes out of the pay before any tax or NI is paid, thus you earn less, so pay less tax. You will pay the full price of the bike but because of your reduced tax your bike costs you less than it should.

Don't forget the reduced cost in fuel/public transport if cycling instead of driving or getting the bus

The fact you are close to the tax free element does make it more complicated but you should hopefully still make some saving from that as well

I find the scheme to work very well, I'm on my second bike - I have £1000 CX bike which I use for offroad fun and winter commuting to go with the first one I got - a £550 road bike. If I had the space I would be on a third one as soon as this one ends!

richardawaller

I started a Cyclescheme in February and I'm confused about their claims.

The overall value of the bike and equipment (including the expensive lights that got stolen) is £424.98.and I've been having £35.42 deducted from my wages every month and will through to February when I come to the End Of Hire options when I'll have the option to buy the bike outright at 18% of the original cost. However after 12 months of £35.42 I'll have paid the whole value of the bike and accessories, so with the end of hire payment added on the true cost is about £500 which is inconsistent with the website's claim that you'll save at least 25% on the bike.

Even if I say that £100 of that would've been tax (below average salary) bringing the actual expenditure on the scheme down to about £400 from £424.98 then really £25 is 6.25% of £425. I wanted a cheaper bike but was told that sale items weren't eligible in the scheme and I couldn't afford to buy a bike outright so went for the instalments approach. With hindsight I may as well have got one out of the catalogue and let them add the interest, it'd have been better for me. So I feel like I've been (excuse the pun), taken for a ride. It doesn't seem to be what it claims to be

RebeccaI

You might find it helpful to get in touch with the shop where you bought the bike maybe? They'll obviously deal with a lot of cycle scheme purchases and may be able to offer some free advice?