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Cycle to work -£1000 bike for £409, is that right?
I would like to get a bike to cycle to work, and my employer’s cycle to work scheme is coming open. Now i have heard fairly mixed views about the scheme, but i went on an incomee tax calculator, and if i put in my current salary (58k) with 13.5% pension contributions and still repaying student loan (type 1), then put in the salary after a 1k sacrifice for the bike, the difference in annual takehome pay is only £409. Now I realise I will have paid slightly less of my loan off, and will lose £17 of my pension annuity (teacher pension scheme), but can that be right that I will only be poorer next year by £409 for a £1000 bike? Seems a very good deal to me!
And before people mention the final payment, my employer makes you take out another 4 year lease at the end of the scheme at no addiyional cost. Presumably after 5 years if there is any payment to be made for the bike it should be pretty small.
Thanks a lot for either confirming or showing me where my logic has failed me!
Comments
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It "costs" you £409 but the full £1000 comes out of your salary, it's a good scheme for the most part - the normal saving for HR tax payer is about 35% though, not sure how the other bits affect it I'm afraid but ~60% saving seems a tad high, probably helps you don't pay anything at the end
Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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I'm not familiar with the scheme but putting the figures into a couple of different calculators comes up with the maximum being 42% off so the total cost would be £580.00 for an £1000 package.
John0 -
Thanks for the answers. I also saw the 42%, but i think that only accounts for pure tax savings. For example by sacrificing my salary by 1000 i will pay 90 pounds less to student loans. Obviously i still have to pay that at some point, but given the interest rate is below inflation it doesnt seem a bad idea. Equally i pay a certain percentage of my gross salary in order to retire at 65 rather than 68 without actuarial reduction. This benefit dorsnt change if i earn 1k less, but i pay less for it. So though the bike wont in itself cost me only 409 net, it will be how much poorer i will be next year as a result of it, which in some ways seems like a good measure to me. I think I!!!8217;ll go for it!0
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The scheme sounds good on paper. You won't save as much as you think especially with the final payment. You are more likely to get a bike cheaper in a sale or do a deal with a shop and avoid all the paper work, plus you have to remain with the company to remain on the scheme.0
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Some schemes are also locked into a chain of shops such as Evans Cycles which may mean you pay a bit more than you would online, (for example).0
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The scheme sounds good on paper. You won't save as much as you think especially with the final payment. You are more likely to get a bike cheaper in a sale or do a deal with a shop and avoid all the paper work, plus you have to remain with the company to remain on the scheme.
If you read the OP rather than doing a copy/paste answer, his firm do the final 4 year lease for free
You can get sale bikes on C2W (see Paul's Cycles for example)
Once the bike is paid off after the first year, there is no issue leavingSam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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Some schemes are also locked into a chain of shops such as Evans Cycles which may mean you pay a bit more than you would online, (for example).
Which schemes (plural) are these? The Evans one is the only one I know of like that. Cyclescheme, Halfords etc can be used all overSam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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If you read the OP rather than doing a copy/paste answer, his firm do the final 4 year lease for free
You can get sale bikes on C2W (see Paul's Cycles for example)
Once the bike is paid off after the first year, there is no issue leaving
Maybe rules have changed or are different for each company but that was the case about 5 years ago when I joined the scheme. If the OP thinks it is beneficial then go for it, just giving opinion based on my experience.0 -
Maybe rules have changed or are different for each company but that was the case about 5 years ago when I joined the scheme. If the OP thinks it is beneficial then go for it, just giving opinion based on my experience.
Yes but you didn't read what he wrote, that's the point
In some schemes you pay a deposit at the end for the extended lease, others you don't.
If a sale bike is more than 24% or so discounted and c2w isn't available, it's worth the sale but below that or if the sale bike is on c2w, it is better value to use this scheme. Moreover, the sale bikes may be on old tech e.g. last year might have had 4600 tiagra, replaced by 4700 on newer bikesSam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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