Are cycle to work schemes worth it?
Discussion
Just heard that my work are starting a bike to work salary sacrifice scheme. Thought this might be a good excuse to get a shiny new road bike.
The planet-x carbon ultegra I saw on another thread here this morning is £999.99, the maximum allowed on the scheme. This would cost £680 over a 12 month period.
However, Planet-x want a 10% admin fee for cycle to work vouchers, and to buy the bike off the employer at the end of the 12 months would cost a further £250 (25% of the bike's cost. So that means it would cost me £1030. Makes no sense to me.
If I got a Boardman pro carbon for the same price it would cost £930, again, hardly seems worth it? especially considering it's not really what I want.
There seems to be a deferred payment option at the end of the 12 months, which would reduce the cost of the final payment but this appears to be at the employers discretion. Anyone had any experience of these schemes?
The planet-x carbon ultegra I saw on another thread here this morning is £999.99, the maximum allowed on the scheme. This would cost £680 over a 12 month period.
However, Planet-x want a 10% admin fee for cycle to work vouchers, and to buy the bike off the employer at the end of the 12 months would cost a further £250 (25% of the bike's cost. So that means it would cost me £1030. Makes no sense to me.
If I got a Boardman pro carbon for the same price it would cost £930, again, hardly seems worth it? especially considering it's not really what I want.
There seems to be a deferred payment option at the end of the 12 months, which would reduce the cost of the final payment but this appears to be at the employers discretion. Anyone had any experience of these schemes?
Short version - at the end of the period there are two choices:
1. Employer gives you ownership of the bike. HMRC judge this to be a Benefit In Kind worth 25% of the bikes cost (£250) and charge you the TAX on this amount (£55/£100 depending on band). Total cost ~£735.
2. Employer gives CycleScheme (or whoever) the bike. Because it is not given to you, there is no BIK tax liability. CycleScheme continue to lend you the bike free of charge for another 4 years until HMRC judge it to be worthless, when they transfer the ownership over to you. There is often an admin fee involved in this route, which I guess is where the 10% comes in. Total cost ~£780.
Option 2 is the more common these days as it makes more money for the CycleScheme companies and is simpler for the employer. It's not quite as much of a good deal as it once was, but it's still a decent saving.
1. Employer gives you ownership of the bike. HMRC judge this to be a Benefit In Kind worth 25% of the bikes cost (£250) and charge you the TAX on this amount (£55/£100 depending on band). Total cost ~£735.
2. Employer gives CycleScheme (or whoever) the bike. Because it is not given to you, there is no BIK tax liability. CycleScheme continue to lend you the bike free of charge for another 4 years until HMRC judge it to be worthless, when they transfer the ownership over to you. There is often an admin fee involved in this route, which I guess is where the 10% comes in. Total cost ~£780.
Option 2 is the more common these days as it makes more money for the CycleScheme companies and is simpler for the employer. It's not quite as much of a good deal as it once was, but it's still a decent saving.
Or Option 3 (as happened to me): Leave the job, hear nothing about returning the bike or paying the extra, and live happily ever after.
Every year a few colleagues take a bike on some scheme or other, and I've never heard of anyone being charged the 25% final bill - anecdotally it appears to be on the paperwork only, and rarely if ever enforced.
Every year a few colleagues take a bike on some scheme or other, and I've never heard of anyone being charged the 25% final bill - anecdotally it appears to be on the paperwork only, and rarely if ever enforced.
OpulentBob said:
Or Option 3 (as happened to me): Leave the job, hear nothing about returning the bike or paying the extra, and live happily ever after.
Every year a few colleagues take a bike on some scheme or other, and I've never heard of anyone being charged the 25% final bill - anecdotally it appears to be on the paperwork only, and rarely if ever enforced.
Not true in my experience. I was asked to pay a proportion of the 1 yr old bike's value at my place of work. It all depends how your company manages the scheme (which for me ultimately meant we had to purchase through Halfords).Every year a few colleagues take a bike on some scheme or other, and I've never heard of anyone being charged the 25% final bill - anecdotally it appears to be on the paperwork only, and rarely if ever enforced.
Taking a further £50 or so from me, as well as a £100 odd "admin fee" to start with took the shine off gettting a brand new £1000 bike for £650 - so my real saving was just £200 - which you could probably save more in an end of season sale.
At least I was able to say I got a couple of hundred quid back from the government which was nice in principle. But being someone who rarely buys things of high value at full price, let alone brand new, I still feel it was not worth it, especially as I had to buy through Halfords adn did not get the bike I really wanted.
If you have the right flexibility of scheme it may suit, but it can be different between companies.
My scheme allows you to make a 'continuation deposit' after a year which allows you to keep it another 3 years- that costs 3% on bikes up to £500 or 7% for bikes valued £500-£1000.
If you pay 40% tax that's a £1k bike for a total of £649. Or £749 if a 20% tax payer.
I also look at it as a 0% loan over a year as well.
Looks pretty good to me.
If you pay 40% tax that's a £1k bike for a total of £649. Or £749 if a 20% tax payer.
I also look at it as a 0% loan over a year as well.
Looks pretty good to me.
I've often wondered where the savings are made. I bought a £1500 Cannondale SuperSix 105 from Evans.
I put £500 down myself and took £1000 on the scheme. I already had kit.
I paid 83.33 a month for 12 months. = £999.96
Then had to pay the fee to keep the bike (extended the deal for a further 3 years), that cost me £70.
Total cost = £1569.96
I hear all sorts of people, saying it's made up in the tax and national insurance savings!? How does this work? Anyone care to do the sums?
You cant even view it as interest free loan as the £70 fee at the end negate's that.
I put £500 down myself and took £1000 on the scheme. I already had kit.
I paid 83.33 a month for 12 months. = £999.96
Then had to pay the fee to keep the bike (extended the deal for a further 3 years), that cost me £70.
Total cost = £1569.96
I hear all sorts of people, saying it's made up in the tax and national insurance savings!? How does this work? Anyone care to do the sums?
You cant even view it as interest free loan as the £70 fee at the end negate's that.
Evo Sean said:
I've often wondered where the savings are made. I bought a £1500 Cannondale SuperSix 105 from Evans.
I put £500 down myself and took £1000 on the scheme. I already had kit.
I paid 83.33 a month for 12 months. = £999.96
Then had to pay the fee to keep the bike (extended the deal for a further 3 years), that cost me £70.
Total cost = £1569.96
I hear all sorts of people, saying it's made up in the tax and national insurance savings!? How does this work? Anyone care to do the sums?
You cant even view it as interest free loan as the £70 fee at the end negate's that.
My understanding is that the 83.33 is before tax, so of that, if you didn't have a C2W bike, you'd only ever see what, £60ish? anyway (Me no understand taxes, innit...)I put £500 down myself and took £1000 on the scheme. I already had kit.
I paid 83.33 a month for 12 months. = £999.96
Then had to pay the fee to keep the bike (extended the deal for a further 3 years), that cost me £70.
Total cost = £1569.96
I hear all sorts of people, saying it's made up in the tax and national insurance savings!? How does this work? Anyone care to do the sums?
You cant even view it as interest free loan as the £70 fee at the end negate's that.
Most retailers do not charge an admin fee
Most retailers let you buy sale bikes via the scheme
Most employers let you extend the hire for 3 more years by paying a 5 or 7% deposit . In effect it's yours.
Then get another ...
Been done to death 101 times here before!
Best to check your scheme & your employers T&Cs for the answer
Most retailers let you buy sale bikes via the scheme
Most employers let you extend the hire for 3 more years by paying a 5 or 7% deposit . In effect it's yours.
Then get another ...
Been done to death 101 times here before!
Best to check your scheme & your employers T&Cs for the answer
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