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Cycle 2 Work Schemes

nivaghnivagh Posts: 595

So my employer is (at last) offering a cycle to work scheme.

Great! An opportunity to replace my winter hack with something shinier.

However, a read of the Ts and Cs reveals that it's in fact a hire scheme, so for a £1000 bike it costs me £513 over 12 months on a hire agreement.

My question is what happens after 12 months!

There's no way I would pay £500 for the privilege of renting a £1000 bike for a year without having some right to title or buying the bike after a year for £100 or some other similar low value.

Why pay £500 rental on a bike when I could buy a good second hand one for that money, except for the benefit of spreading the capital outlay over 12 months, I don't see the point.

Anybody got any experience of what happens in real life at the end of the 12 months? [8|]


  • willtriwilltri Posts: 436

    There's a nominal sum that needs to be paid at the end of the twelve months.

    I believe that this nominal sum cannot be agreed at the begining of the agreement as it would then change the agreement's nature and you wouldn't then get the tax benefits.

    What's a nominal sum - the value of the bike at the time or £1. I'll think we'll go with a quid! but nothing is written down due to above.

    Once the nominal sum has been paid the ownership passes to you.....

    This should be right and better be - there's no way that work are getting my Trek!! [:D]

  • risris Posts: 1,002
    the nominal sum in the version run by cyclesheme i think is called a 'fair market value' and should be set by your employer. i recall it being 5% of the voucher when i coughed up for my airnimal.

    i think it works both ways, most companies don't want fleets of bikes to store and look after, particularly if they are unrideable tt bikes [;)].

  • JulesJules Posts: 987
    You need to make sure that you have the "nominal" figure agreed by your employer before you commit yourself.

    The hire element is only to make it work from a tax point of view. In reality you are "buying" the bike and your employer will not be expecting to own it after the 12 months. So long as you get the nominal figure agreed you should be fine.
  • nivaghnivagh Posts: 595
    Have had confirmation back that they're going to charge the higher of £25+VAT or 5% + VAT.

    Limit is set at £1000 and they won't allow us to put money to it. I'm thinking seriously about a Boardman Team Carbon or maybe a Dolan Mythos. Would go for a Planet X if they would let us put money towards. bah.
  • MrSquishyMrSquishy Posts: 277
    Do you have to buy a complete bike - could you have a word on the sly to Planet X and get them to do everything but the wheels for £1000, and purchase the wheels yourself?
  • risris Posts: 1,002
    i was going to suggest something similar... would the bike shop be prepared to let you contribute on the side? might not hurt to ask!
  • willtriwilltri Posts: 436
    Limit is set at £1000 and they won't allow us to put money to it.

    Not sure how they'd know that you had added money to it. I did mine with Cyclesurgery - used the voucher and then put a bit more towards it.

    Unless your work ask for the receipt!?!?!?

    As ris says - be suprised if the bike shop will turn your money away!!
  • diddsdidds Posts: 655
    willtri wrote:

    Unless your work ask for the receipt!?!?!?

    my understanding is that "work" will present you with a voucher yo use at the shop in question (who presumably have either had the money up front already a bit like a book token, or it is "guaranteed" a bit like a bankers draft.

    Otherwise your "receipt" might just be a money laundering exercise ;-)


  • steve785steve785 Posts: 52
    hi i aquired a lovely cannondale on the scheme , you can add money on your voucher i maxed out on mine but the shop said you can pay the balance of the extra i want another one this year but i am lead to believe you cant!! im gutted want a tt bike next dont miss the payment from my wage as it comes out in the tax side cool! pay market value....... it wont be worth anything when i have finished eith it carbon doesnt last long ...yeeeeeha
  • i got race wheels. thanks to the irish gov.ksyrum elite jobbies.

    the l.b.s. gave me an invoive for a bike. {been shopping there years}

    about time i got something back, i pay mega amounts of tax.
  • BopomofoBopomofo Posts: 980
    Do a search on Cycle2Work and put my username in... I've said loads on this in the past....

    Oh sod it, here goes:

    Cycle to Work allows employers to loan you a bike without having to be approved credit lenders. This is a tax scheme, enforced by HMR&C and the rules are not negotiable. The rules are:

    1) Maximum of £1000 inc. VAT to be spent on a COMPLETE cycle and safety equipment

    2) Cannot be topped up in any way using your own money

    3) The period is from 6-24 months but will be fixed by the employer

    4) They MAY sell you the bike afterwards, but they MUST NOT agree the price beforehand as this would make it a 'Hire Purchase' agreement and then you'd have the taxman up your jacksie.

    5) As your company is buying the bike, the amount you pay over the period you agree will equal the purchase value of your bike but will be ex-VAT and ex-Tax and National Insurance.

    So, all this means that your £1000 bike - which actually costs £870 without VAT - will be paid for out of untaxed income. This is usually done using a 'Salary Sacrifice' scheme. At the end of the scheme the company MUST charge you a 'fair second-hand value' for the bike. If they didn't it would be a taxable perk and would have to be declared on your P60, obviously.

    In practice they will always sell you the bike afterwards, for an amount of between £0 (and the taxman can't be arsed to chase you) and about 20%+VAT of the value.

    There are many providers who will let you get away with topping up with your own cash, or even let you spend the money on an incomplete bike. I know people who've bought £3000 bikes with their £1000 voucher + credit card, or indeed bought a nice new frame to stick their own kit onto, but the point is that you should NOT expect this to happen. Plan for a contingency in case it all goes official on you.

    Finally, in these troubled times, think of this: You get your voucher for the max £1000 and your LBS lets you top it up to a £2000 bike that you otherwise couldn't afford. A month later you lose your job. Your company will assess that you have paid about £30 towards the cost of the bike and bill you for £970 quid. You have to pay up, or you lose that extra money you put in because the company keeps 'their' bike.

    I was laughing my arse off when I got my lovely Dolan Mythos Ultegra beauty for £30 a month on the Halford's Cycle2Work scheme (yep... you don't have to get a Halford's bike) as it was going to cost me about £550 total. Then I lost my job. I'd already paid about £150 but they shagged me for £570 on the way out of the door. They told me I could've given the bike back if I didn't want to pay.

    Does that answer it all?


  • So if you want a bike over £1000, before you decide to sign up for the cycle 2 work scheme you could go down Evans or whereever and see if they will let you top up the voucher with your own money? And if they do you could sign up? Do you have to supply your employer with the reciept for the bike though?

  • JulesJules Posts: 987
    How's the half IM training going Bopo? (And the job hunting?)

    Remember it is a condition of the C2W schemes that you use the bike at least predominantly to ride to work. I know several people who don't do this. In theory if you get a bike this way and don't ride it to work you could be in trouble with HMRC or possibly even the criminal authorities.

    I've never heard of HMRC ever checking the use C2W bikes are put to so you can buy a £1000 TT bike that you only use for racing and probably get away with it. (The MP approach).
  • willtriwilltri Posts: 436
    you can get a bike worth more than £1k if your company has a "consumer credit licence".
  • I got my bike, pedals, shoes etc on our Cycle2 Work scheme and it feels like a freebie because:

    a) Work paid the LBS directly, so nothing came out of my pocket

    b) the 30 quid a month comes out pre-tax etc so it isnt "missed"

    When I signed up, riding it to work was mentioned.....briefly.......maybe once....possibly, but surely they werent being serious!?

  • BopomofoBopomofo Posts: 980
    How's the half IM training going Bopo? (And the job hunting?)

    Been there, done that. The full horror is documented here: http://forum.220magazine.com/fb.asp?m=44998

    Apologies for going off topic.
  • JulesJules Posts: 987
    Bopomofo wrote:
    How's the half IM training going Bopo? (And the job hunting?)

    Been there, done that. The full horror is documented here: http://forum.220magazine.com/fb.asp?m=44998

    Apologies for going off topic.

    Yeah, spotted it after, doh.
  • I went into Evans at lunchtime and asked about topping up the £1000 voucher with my own money and they said it was fine.

    Cant wait now till my cycle 2 work scheme opens again
  • nivaghnivagh Posts: 595
    Thanks Bopo

    (I did go off and find the older thread in the interim)

    When I commute on my bike it's between 11 and 31 miles each way depending on whether I drive part of the journey, so it's actually likely that my commuter mileage will he higher than my weekend "leisure" riding.

    We do have to use Halfords but they will apparently source any brand of bike for you (though I don't know if they will put a markup on it).

    I don't expect they'll let me take a bike for a spin though, will they? If I was buying a car for a grand, I would expect to drive it first, so why not a bike?
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