We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

Cycle to work -£1000 bike for £409, is that right?

Options
2

Comments

  • stevie11
    stevie11 Posts: 682 Forumite
    Options
    Well the point is the scheme the OP is looking at must have been a better scheme than I was on so it therefore more beneficial to him.
  • Nasqueron
    Nasqueron Posts: 9,268 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    Options
    stevie11 wrote: »
    Well the point is the scheme the OP is looking at must have been a better scheme than I was on so it therefore more beneficial to him.

    Indeed, some are better value than others! Last time I looked Evans didn't have the final payment either. His firm might operate an internal one (I think Network Rail do something like that?)
  • marks87
    marks87 Posts: 180 Forumite
    First Post First Anniversary Combo Breaker
    edited 3 June 2018 at 10:00AM
    Options
    I've just started a hire via Cyclescheme and was as confused as the OP when I worked out that my £83.33 monthly deduction worked out at £47.70 after tax (comparing May's payslip to April's).

    However, I'd forgotten the deposit at the end, before moving into the 3-year payment free phase. Once the deposit (7% for a £1,000 bike) is added it brings the total I'll pay up to a little under £650, which is what I expected.

    I was also interested to read in the OP (and other threads on here) that pension contributions would be affected. My pension contribution has remained the same, so that must mean it's the first deduction that's calculated. Is the employer contribution calculated in the same way, or is it based on the final taxable salary?

    It would seem odd to me if salary sacrifice affected pension contributions, because before the rules changed that's how parking permits at my employer were paid for, and there was no warning on the annual application form. They'd surely be on dodgy ground by not letting people know that technically they'd be paying for their permits into retirement?
  • Nasqueron
    Nasqueron Posts: 9,268 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    Options
    marks87 wrote: »
    I've just started a hire via Cyclescheme and was as confused as the OP when I worked out that my £83.33 monthly deduction worked out at £47.70 after tax (comparing May's payslip to April's).

    However, I'd forgotten the deposit at the end, before moving into the 3-year payment free phase. Once the deposit (7% for a £1,000 bike) is added it brings the total I'll pay up to a little under £650, which is what I expected.

    I was also interested to read in the OP (and other threads on here) that pension contributions would be affected. My pension contribution has remained the same, so that must mean it's the first deduction that's calculated. Is the employer contribution calculated in the same way, or is it based on the final taxable salary?

    It would seem odd to me if salary sacrifice affected pension contributions, because before the rules changed that's how parking permits at my employer were paid for, and there was no warning on the annual application form. They'd surely be on dodgy ground by not letting people know that technically they'd be paying for their permits into retirement?


    Probably need to ask on the pensions board about this
  • Spidernick
    Spidernick Posts: 3,803 Forumite
    Combo Breaker First Post
    Options
    My understanding was that you still pay the full VAT, so on a £1,000 bike the saving would apply to the net £800 only and the full VAT of £200 would be paid in addition to the net payment on the £800 that does qualify, meaning you don't get 42% tax and NI relief (ignoring the pension and student loan issues) on the full £1,000.

    It's been a while since I did this, so this may not be fully up-to-date.
    'I want to die peacefully in my sleep, like my father. Not screaming and terrified like his passengers.' (Bob Monkhouse).

    Sky? Believe in better.

    Note: win, draw or lose (not 'loose' - opposite of tight!)
  • CarolynRach
    CarolynRach Posts: 203 Forumite
    First Anniversary
    Options
    There are lots of schemes available. If you want to shop at a particular bike shop, you can ask them which schemes they accept vouchers for. For example, this shop is my local and they have their own cycle to work scheme but they also accept vouchers for other schemes which includes the one my employer has signed up to.
  • Nasqueron
    Nasqueron Posts: 9,268 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    Options
    Spidernick wrote: »
    My understanding was that you still pay the full VAT, so on a £1,000 bike the saving would apply to the net £800 only and the full VAT of £200 would be paid in addition to the net payment on the £800 that does qualify, meaning you don't get 42% tax and NI relief (ignoring the pension and student loan issues) on the full £1,000.

    It's been a while since I did this, so this may not be fully up-to-date.

    HMRC clarified that you have to incorporate VAT in the price but this was in 2012, over 6 years ago!

    Lower rate tax payer will save 32% (rather than 43% which you did before the ruling)
    Higher rate tax payer will save 42% (rather than 52%)

    When you add the extended rental price, it does reduce the savings a bit but not all schemes do this so you can still save that much on the right scheme

    https://www.cyclescheme.co.uk/employers/employer-updates/cyclescheme-hmrc-vat-update-faqs#faq2
  • fred246
    fred246 Posts: 3,620 Forumite
    First Anniversary Name Dropper First Post
    Options
    I have got a whole collection of bikes going back to the 1960s. I service and maintain them myself and build my own wheels. As long as I true the wheels, with good spoke tension, pump the tyres up hard and lubricate the bike they all fly. The older ones don't stop as well. If I time myself cycling to work they all get me there within a few seconds of each other. The problem with the Cycle to Work scheme is that people think that buying a £1000 bike is normal. I don't think the government ever intended £1000 to be normal, just a maximum. They then have security issues as they have a shiny new expensive bike that they don't secure adequately and get them stolen. The bike shops like it because they charge full RRP on a bike. It's like paying full list price on a car. I always wonder if anyone actually does ever pay full RRP on a car? So buy a cheaper or secondhand bike and learn how to look after it.
  • Nasqueron
    Nasqueron Posts: 9,268 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    Options
    fred246 wrote: »
    I have got a whole collection of bikes going back to the 1960s. I service and maintain them myself and build my own wheels. As long as I true the wheels, with good spoke tension, pump the tyres up hard and lubricate the bike they all fly. The older ones don't stop as well. If I time myself cycling to work they all get me there within a few seconds of each other. The problem with the Cycle to Work scheme is that people think that buying a £1000 bike is normal. I don't think the government ever intended £1000 to be normal, just a maximum. They then have security issues as they have a shiny new expensive bike that they don't secure adequately and get them stolen. The bike shops like it because they charge full RRP on a bike. It's like paying full list price on a car. I always wonder if anyone actually does ever pay full RRP on a car? So buy a cheaper or secondhand bike and learn how to look after it.

    To be fair, £1000 isn't advertised as the price you should spend on the bike, indeed, there is a significant reduction in the final extended rental on cyclescheme (as an example) for the invoice being under £500. The £1000 is meant to cover ALL the things you need to cycle to work so bike, locks, clothing, lights, pannier etc and the calculators on the sites explain this
  • marks87
    marks87 Posts: 180 Forumite
    First Post First Anniversary Combo Breaker
    Options
    The bike I'm getting is a £1,000 bike but that's the type of bike I wanted, so for me the scheme was a no-brainer. I bought extra bits on top with my own money.

    My current bike is a flat-bar hybrid which is good, but the ride position starts to get uncomfortable on long rides. So I've using the scheme to get a Cyclocross bike which is good for commuting (i.e. takes a rack and is pretty sturdy), but also suited to longer rides because it has drop bars.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 344.6K Banking & Borrowing
  • 250.6K Reduce Debt & Boost Income
  • 450.4K Spending & Discounts
  • 236.8K Work, Benefits & Business
  • 610.5K Mortgages, Homes & Bills
  • 173.8K Life & Family
  • 249.5K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards