Cycle to work scheme “no guarantee of ownership”

Carcy

Hi all, 
I am looking into getting a new bike through the cycle to work scheme. Originally I thought this was a no brainer as it would mean paying for the bike out of my pre-tax income. However, my employer is using Vivup as their chosen provider of the scheme. Vivup’s FAQs state that there is no guarantee of ownership of the bike. Specifically, it states:

A. The Disposal Fee is the charge for the collection and disposal of the bicycle at the end of the loan period as there is no right to ownership through the Cycle to Work Scheme. Bicycles may be sold for a Fair Market Value at the end of the loan period under a separate agreement, although this cannot be guaranteed. The Disposal Fee paid may be offset against the Fair Market Value due. If you have any queries about what happens after the loan scheme has finished please contact Vivup on 01252 784540 or email: customersupport@vivup.co.uk

Q. What happens at the end of the twelve‐month hire period?

A. SME HCI Ltd (Vivup) will own the bicycle during the entire hire. Vivup will contact you at the end of the scheme to detail your options which, under a separate agreement, could include:

 Extending the hire period. After 2 years (3 including the original hire) ownership of a £1000 bicycle can be transferred to you. If the original purchase price was less than £500, this can be actioned after just 1 year (2 including the original hire). Bicycles over £1000 can be transferred within 6 years, depending on their initial value.

 Taking ownership for fair market value.

 Returning the bike – if you decide not to keep the bike SME HCI Ltd (Vivup) will arrange for it

to be collected from you and recycled. Other information to be made aware of:

No guarantee of offer of ownership can be given to employees at any point before or during the hire period.

This sounds as though I will be paying the value of the bike over the 12 months hire period, then potentially have the bike taken away and own nothing. This doesn’t seem like much of a benefit to me. I’ve enquired about whether the hire costs are any cheaper than Cyclescheme, waiting to hear back but I doubt it is. Cyclescheme is so much clearer!

If it was a cheaper bike I would just buy outright but I’m considering an e bike that’s a bit pricey. What do people think? Any chance I have misinterpreted? Is it still worth getting a bike through this scheme?

unforeseen

The Cycle to work scheme has only ever been a hire scheme. How it is managed at the end of the hire period is up to the supplier

Carcy

Thanks. In that case it sounds as though buying outright or on a 0% finance plan would be more MoneySaving. Otherwise you could essentially be paying the cost of the bike over the hire period (albeit pre-tax) then not get a bike at the end.

KeithP

That term is just covering themselves with the taxman. Nothing to worry about.

Are you going to follow up this...

If you have any queries about what happens after the loan scheme has finished please contact Vivup on 01252 784540 or email: customersupport@vivup.co.uk

Billy_B_North

In general your company or a service provider owns the bike until X years have passed, but in reality if you move in no-one’s going to come looking for the bike.

It’s a great scheme, and if you can make use of it I think that you really should.

Carcy

KeithP said:

That term is just covering themselves with the taxman. Nothing to worry about.

Are you going to follow up this...

If you have any queries about what happens after the loan scheme has finished please contact Vivup on 01252 784540 or email: customersupport@vivup.co.uk

Thanks, I did email them am just waiting to hear back. 
I found this on HMRC FAQs so I think you’re right that they are just covering themselves

 There must be no option, whether express or implied, as part of, or alongside the initial hire agreement for the employee to purchase the cycle or equipment at the end of the hire agreement. If there is, this is likely to make it a hire-purchase agreement (rather than a hire agreement) where different regulatory requirements apply and it would no longer be eligible for the tax exemption. Therefore, your employee scheme rules should not refer to ownership as an option, and any decision to sell the cycle or equipment to the employee should be entirely discretionary at the time. It is important therefore that the employee is not given any expectation at the outset that they may be entitled to buy the cycle outright.

[Deleted User]

Billy_B_North said:

In general your company or a service provider owns the bike until X years have passed, but in reality if you move in no-one’s going to come looking for the bike.

It’s a great scheme, and if you can make use of it I think that you really should.

I believe you are right in ALMOST all cases. But I do actually know a guy who used the scheme, got a bike, had it for about a year, then changed jobs. He was surprised when the company then asked for the bike back.

That's one case I've heard of, and only one, so I think it's rare, but can happen. 

Ballard

My company dipped their toe into this scheme but when I looked into it I would only have been able to use Halfords and a few online shops. Halfords didn't do the sort of bike I was after but the online shop (Tredz) did so I looked into their T&Cs and after a year (the only term that my employer offered) I'd have paid the bike off but the shop then required 25% of the cost of the bike to transfer ownership to me. This almost completely negated the purpose of this scheme so I ended up buying the bike outside of the scheme. I think that I could have saved around £100 getting it through the scheme but I much preferred to speak to people in the shop and take their advice on sizes. When I picked it up, of course, they were able to ensure that it was setup correctly for me.

It's worth me pointing out that not all shops charge this fee but the scheme my company chose only used shops that did.

Age of Cycle	HMRC Fair Market Value
	Original price of bike under £500	Original price of bike over £500
1 year	18%	25%
18 months	16%	21%
2 years	13%	17%
3 years	8%	12%
4 years	3%	7%

Aretnap

Carcy said:

Thanks. In that case it sounds as though buying outright or on a 0% finance plan would be more MoneySaving. Otherwise you could essentially be paying the cost of the bike over the hire period (albeit pre-tax) then not get a bike at the end.

That is a theoretical possibility, but in reality it's very unlikely to happen. Your employer is unlikely to have any use for a second hand bike (assuming you don't work for a second hand bike shop) and doesn't want your bike. They're not running the scheme to build up a collection of second hand bikes - they're running it as a perk for the staff. So while HMRC insist that they don't come out and say "of course you can buy the bike at the end of the hire period", in practice that's what will happen at least 99% of the time.

Carcy

Ballard said:

My company dipped their toe into this scheme but when I looked into it I would only have been able to use Halfords and a few online shops. Halfords didn't do the sort of bike I was after but the online shop (Tredz) did so I looked into their T&Cs and after a year (the only term that my employer offered) I'd have paid the bike off but the shop then required 25% of the cost of the bike to transfer ownership to me. This almost completely negated the purpose of this scheme so I ended up buying the bike outside of the scheme. I think that I could have saved around £100 getting it through the scheme but I much preferred to speak to people in the shop and take their advice on sizes. When I picked it up, of course, they were able to ensure that it was setup correctly for me.

It's worth me pointing out that not all shops charge this fee but the scheme my company chose only used shops that did.

Age of Cycle	HMRC Fair Market Value
	Original price of bike under £500	Original price of bike over £500
1 year	18%	25%
18 months	16%	21%
2 years	13%	17%
3 years	8%	12%
4 years	3%	7%

Yes 25% is a bit steep you don’t end up saving much! I think what cyclescheme and some other providers do is that, after the first year they would then allow you to continue to hire the bike after the first for no additional cost for another few years, so that at the end you’d just pay the 7% of the price (or 3%), which would be pretty good.

The bike I want is a Ribble and it looks like they accept cyclescheme vouchers, so I can hopefully just go into the store and get them to set it up for me.

Thanks everyone. It sounds as though there is potentially some risk of throwing my money away if Vivup want the bike back but it’s unlikely to happen and buying through the scheme would save me some £££! 

[Deleted User]

I have yet to see a cycle saving scheme where, after you have paid off the bike, the scheme firm will demand the bike - it's nonsensical and completely defeats the purpose of buying a bike via the scheme as you're effectively paying the full price for the bike as a year long loan. It's 99.999% just going to be them covering their backs. Normally after the year is up, you pay the extended rental fee (or come to some agreement depending on the scheme) where the bike is yours to use.

The ownership wording is a red herring though, it's a common misconception that people use against cycle to work to say they don't "own" the bike so don't want to use the scheme but that's like saying never buy a car on PCP or a house with a mortgage