Cycle to work scheme

Nasqueron

wallofbeans said:

Nasqueron said:

wallofbeans said:

Hi All,

I'm looking into getting a new folding bike for my commute and can use cyclescheme.co.uk -- but I'm confused about how this works and if it's a good idea for me. 

I'm looking at a £2300 Brompton bike and it seems the total I would pay is closer to £1300 over 12 months - and so a very good deal for these expensive bikes. 

But I'm confused by this mention of not owning the bike for 3 years. The calculator says I pay a monthly amount from my salary and then, after 12 months, a one off small payment - and that's it.

But the site also talks about the details of the "own it later" option, saying "You pay a small refundable deposit (either 3% or 7% of your certificate value) and continue to use the equipment for 3 years. No other payments (whatsoever) are required during this time. At the end of the 'Own it later' period, no further action or payment is required if you wish to keep the equipment - we simply retain your deposit and transfer ownership to you. Cyclescheme refunds the deposit if you do not wish to keep the equipment."

What is this refundable deposit they mention? And why isn't it given on their calculator? And where does this 3 years come into it? Don't I own the bike after 12 months? 

I suspect I am missing something, and the 'cyclescheme' calculator isn't helping, and their FAQs just made me more confused. 

When you use cycle to work, you still pay the £2300 from your salary, it's just it comes out before tax which in turn reduces your tax so that is the saving element. 

The point of the cycle to work tax benefit is that you effectively rent the bike until it's written off in value. When it was first launched, people would take the p with them and say a brand new bike was worth nothing after a year so HMRC closed the loophole. Some schemes do it slightly differently but cycle scheme charge the 7% (based on bike value quoted) as an extended rental to cover their admin fees and at the end of the 4 years, you can either hand the bike back and get the 7% refunded to you or keep the bike.

The "ownership" element is the one I find most people seem to misunderstand, realistically the bike is yours from day 1, your firm doesn't want the bike and provided you pay the money over the 12 months, don't care. Cyclescheme don't want it either really though would probably look to sell it and make some profit. It's your bike, just technically it's a loan for the first year and a rent for the next three. If you want to see it any other way, that is fine

Thanks for this. The bit that wasnt clear from the cycle scheme 'calculator' was that the bike didn't officially become mine until a further 36 months after the initial 12. Which is what worries me. What if I am no longer in the same job after 3 years? This is perfectly possible. Do they still not care? Do I still get to keep the bike?

The only consideration is the first year - if you leave before this and the bike is unpaid, the firm will ask for the full amount you still owe without the tax break. After 1 year it's between you and the scheme and who you work for (if at all) is irrelevant, it's basically a rental for tax purposes after that.

As I said, you can view the ownership as "technically no, but yes" if you want. As soon as the bike is paid for via your salary deductions, it's yours in all but a box ticking exercise and to be honest, as soon as you collect it, it is yours provided you keep up the payments, I've never considered either of mine as anything else