Cycle to work scheme

Matt_22

I'm about to start a new job that offers this scheme
 Has anyone used it recently?
 Seems you can get about 30% off a bike 

MacPingu1986

There are a couple of *slightly* different schemes out there but generally speaking yes they are excellent - It's salary sacrificed so you get 32% (income tax & NI - more if higher rate payer) off the bike, plus the payments are spread out over a year. At the end of a couple of years because the bike is technically bought by the employer and hired to you there's a small final payment made to "buy" the bike from the employer but that is minimal.

Long story short - it's a very cost effective way of buying a bike.

MilesT6060842

Points to watch out for.

The schemes generally result in you *RENTING* a bike for several years paying monthly out of pre-tax income (with some other discounts).  Clearly you need to be paying tax to get full benefit,  You will not own the bike (yet), and you will have to hand it back or buy it for current value if you leave your job.

At the end of the multi-year rental period you will usually be given the option to buy the bike for the residual value (usually not very much, but may not be 100% clear what the final payment will be at the start).

Check what happens if the bike is stolen--you may need to pay back the value, check that you can claim on an insurance policy if that happens;  replacement may restart the multi-year rental period.

One scheme also allows discount annual season pass for London Santander bikes/Santander e-bikes, which may be a better option in some cases.  None seem to offer discounts on other brands of ebikes or other city bike schemes.

Also, usual rule for security, spend at least 10% of bike's value on locks, and do your research to ensure the locks are good (Lockpickinglawyer on YouTube is excellent for showing the flaws of locks, avoid any he says are "low skill attacks" or are vulnerable to easy destructive bypass)

MacPingu1986

Miles - it's a technical rental yes, but in all practical senses you own it. I've not come across anyone who's had to hand their bike back if they leave the employer or had to make any additional payments, ditto I've not aware of any scheme that requires you to hand the bike back.

Ballard

There has been a fair bit of noise about these from bike shops in recent years. They’re all unanimous in their hatred of the scheme as they have to pay a fee per bike and it leaves them with pretty much no profit. 

MilesT6060842

MacPingu1986 said:

Miles - it's a technical rental yes, but in all practical senses you own it. I've not come across anyone who's had to hand their bike back if they leave the employer or had to make any additional payments, ditto I've not aware of any scheme that requires you to hand the bike back.

Wording I have seen in a couple of schemes is the remaining value of the bike will be deducted from your last paycheck (unstated: regardless of cause of leaving). And I can't see why that wouldn't happen unless you are already a couple of years in at least.  HMRC does not allow early writeoff of the bike, either (the current value would be taxable as a BIK), you don't get ownership for free until year 4 or 5 when remaining value is declared as "negligible" in HMRC's eyes.

Matt_22

So it's definitely cheaper then just buying a bike myself?

MacPingu1986

Yes, I'm struggling to think of a scenario where it'd be more expensive. You save 32% straight away and get to pay in 12 instalments. After a couple of years there's typically a small extra payment to convert the technical "hire" into your effective ownership.

KeepOnKnitting

I looked into this once when I was cycling to work. I think you have to buy a fairly expensive bike, and I didn't think it offered good value compared to what I could find second-hand at the time. Just a thought.

Matt_22

It's a small commute 4 miles. I was looking at getting a bike for about £350/400

MacPingu1986

KeepOnKnitting said:

I looked into this once when I was cycling to work. I think you have to buy a fairly expensive bike, and I didn't think it offered good value compared to what I could find second-hand at the time. Just a thought.

It has to be a new bike, but otherwise doesn't need to be expensive, there's no minimum spend.