Cycle to work end of scheme payment

Matt_22

I am looking at taking up the cycle to work scheme through Caboodle. It mentions at the end of the scheme, were you rent the bike. You can buy the bike. Though it doesn't say how much this would cost. Any idea how this is worked out? Thanks 

The_Unready

I used the Cyclescheme service and the site had a calculator on it where you could work out all the payments due. Have a look on cyclescheme.co.uk - it should still be there. I'm assuming the schemes will be similar. 

The_Unready

I've just checked the site. The calculator is in the How It Works section.....

Nasqueron

Matt_22 said:

I am looking at taking up the cycle to work scheme through Caboodle. It mentions at the end of the scheme, were you rent the bike. You can buy the bike. Though it doesn't say how much this would cost. Any idea how this is worked out? Thanks 

The buy at the end is the option only silly people take! You lose basically all your tax savings and is completely unnecessary. 

The extended rental is a (legal) tax dodge to effectively write off the cost of the bike so you take ownership after X number of years without paying anything.

With cyclescheme when I did it, the final rental fee was 3/7% depending on package value though it may have changed since, so you have your 25% or so saving via tax and lose a bit at the end. 

bluelad1927

I have used the scheme several times in the past. Each time I have received a letter asking if I want to pay around £25-50 to keep the bike whick i always reply yes but this must get written off by HMRC as they never collect the payment

Matt_22

So you usually get the bike for free at the end of the scheme?  Or near enough?

Matt_22

Says this babe to pay 2% at the end of the scheme of the bikes value

Nasqueron

Matt_22 said:

So you usually get the bike for free at the end of the scheme?  Or near enough?

The way it works is a bit long winded but basically when the scheme was launched, people were getting brand new bikes and after a year, declaring they were worth nothing and keeping them without any other costs. HMRC decided to tighten up the rules to stop this as it was clearly not in the spirit of the scheme, hence you have this extended "rental" period where the bike is nominally owned by the C2W company with you "renting" it until such time that it's worth basically nothing through depreciation, then they sign it over to you. The only issue that ever comes up is the muppets who argue it's not "your" bike therefore there is a real problem, like your company is going to want a year old bike or the C2W provider will want a 4 year old bike back.

Matt_22

Is there an option to keep renting after a year?

Matt_22

The table above is for a £380 bike. At £31.67 a month for 12 months. So that equals roughly £364 payed back. Doesn't seem much of a saving. Unless I'm wrong.

MacPingu1986

Matt_22 said:

The table above is for a £380 bike. At £31.67 a month for 12 months. So that equals roughly £364 payed back. Doesn't seem much of a saving. Unless I'm wrong.

The £31.67 is the gross salary sacrifice before you account for the Tax and NI savings - once you factor this in it brings you out at the net figure of £22.8 per month = £273 for a £380 bike

Pretty much you'll save just under a third via cycle-to-work if you're a base rate tax payer, and just over 40% if you're a higher rate tax payer (+ benefit of an effective interest free loan)