Cycle to Work Benefit Scheme - Pros and Cons of Different Programmes

This looks legit to me:

http://www.dft.gov.uk/pgr/sustainable/cycling/cycletoworkschemeimplementat5732?page=1

Even deals with the transfer of ownership at the end of the lease period.

If you get the Touche, go to Pearson's direct - they will take the Hallford's voucher directly over the counter, meaning you can spec up the bike exactly how you want.

I believe Condor also accept the voucher directly.

before you hand over the voucher ask about the 'admin' fees. To run the scheme (and accept the vouchers etc) the bike shops are charged 10% of the bike cost by the scheme organisers. Alot of them (brixton etc.) pass this straight on to the customer (so if your buying a 900 quid bike thats 90 quid of your budget). Condor pass on 50% (or 5% of the bike costs). Most bike shops will charge you for build as well so make ur eyou ge the full costs up front.

smells like bullshit to me, the company i work for employs over 2000 people in the uk and they readily endorse this scheme...
Have you tried emailing the people behind the scheme for a business case etc?

My previous job was at a company that employs a similar number to yours, and it's large enough to have to be very wary about what kind of stuff it does. The stuff this guy's saying is bullshit. I know it to be bullshit, but if I want to get the scheme going here, I have to meet the bullshit and try to counter it :-(

I may contact cyclescheme, but I've already provided a tonne of info from various websites such as this. I don't think he'd trust the testimony of an organiser of the scheme as he questions the legitimacy of the whole process.

The buying part at the end of the scheme should be 5% of the bikes cost - make sure he doesnt try to stiff you.

This a concern for me - he's taken the whole 'Fair Market Value' thing to heart and it seems likely that, in the doubtful situation that our company does the scheme, he'll be ringing around the bike shops to get the quotes. The phrase 'by the book' seems to have been invented for him...

So in the long term it could save them money

I've read this too. I will point this out, but he's already stated his concerns over 'dodgy tax savings'.

@dommyracer Yep! Already shown him that! Already pointed out the full government endorsement of the scheme. Already shown the various government-run agencies that run the scheme for their employers (the Police, ffs!). Already shown the finance act. Blah blah blah.

As Huge16 says, it's most likely the case that he's made his mind up and that's that. However, I'm a stubborn c**t and I at least want to be able to prove that I've shown him, beyond a shadow of a doubt, that the only reason he won't do it is his own stupid fsckery.

The one advantage is that I work for a very small company, which means that my inevitable moaning about the matter will get round to the CEO at some point...

To be fair to the FD he does carry the financial responsibility for the company so there is some merit in his "by the book approach". Be stubborn by all means but don't piss him off - its a tough ol'world at the moment!

Good point. I do need to keep it in mind that it's his job to be overly cautious about this kind of thing...

My two pence worth - I work for a large consulting firm (c. 3,000 people) and have bought two bikes with this scheme. It's a pretty risk averse organisation so I agree with the "retard" assessment. The scheme we do means I apply for a cheque that is then sent to me payable to a bike shop, which means you can get anything you want. There may be something around the max value (ours is £1,000 - something to do with consumer credit act), but you can still get something pretty good for that, no? And even a grand bike is only c. 75 quid a month - genius.

Our place went with Cycle Solutions which basically do the whole thing in house and supply the bikes direct from their own retail operation 'Wheelies Direct' bike shop.

Downside - bigger brands only but you can order anything they can find at the distributors for you.

Upside - 10% off the RRP plus all the tax savings and the bike I got was in stock and delivered 48 hours after I emailed the final paperwork to them. Ordered Tuesday delivered Friday. I understood some of the other schemes can take month(s) to get your bike to you?

My two pence worth - I work for a large consulting firm (c. 3,000 people) and have bought two bikes with this scheme. It's a pretty risk averse organisation

Well, I never. :)

so I agree with the "retard" assessment. The scheme we do means I apply for a cheque that is then sent to me payable to a bike shop, which means you can get anything you want.

An astonishing way of doing the scheme if they're risk averse?

Gents, I am a Chief Financial Officer for a City insurance broker; we have a cycle scheme and I have used it myself. The Government's Green Transport Policy under which these schemes are set up isn't a loophole, it's a Government incentive to get more people to be healthy and to reduce environmental damage. The tax break on cycles and cycle safety equipment is written into the Finance Act and is not something that HMRC can object to.

However, what companies should do is write to HMRC to get them to approve the company's scheme and thus avoid queries coming up later. HMRC will give their opinion on whether the scheme is within the rules but will only do so when the scheme is up and running. They will not give approval of a scheme at proposal stage. It is correct that the company benefits from the NIC saving, but if the CFO/FD has decided he doesn't want the hassle of running a scheme (and yes, it is hassle) or he can't be bothered/hasn't got time to research it properly, you could well have a long hard fight to get it set up.

Brilliant advice, everyone, thanks!

Amusingly, I spoke to HMRC today (the tax credits office number was the guess I took), who couldn't advise me much on the scheme, but they did confirm that HMRC employees can take part in the scheme!

I mentioned this to Finance Man in an email. He's yet to reply :-)

Glad I astonished you Oliver - not sure what the risk is? That I could get a COMPLETELY DIFFERENT bike from the one I said I was going to get?

No, I mean, giving people cheques and stuff. ;)

I'm not sure what Oliver had in mind, but my main concern would be that the scheme only applies to certain purchases. It is for cycling to work, therefore doesn't include childrens' bicycles for example. It does include safety equipment such as helmets and lights but doesn't include regular clothing, shoes or accessories. I would want to check the order rather than just hand a cheque over to an employee and risk him buying items that aren't allowed by the Finance Act. In my Finance Department, I would also want to guarantee that I got a receipt back for the purchase, therefore I would rather handle the payment to the shop myself rather than relying on the member of staff to bring in the receipt (not that I'm suggesting you wouldn't do that, but I would be more comfortable with the finance team doing it).

Interestingly, the rules do allow the purchase of two bikes (bet not many people knew that) in certain circumstances. The majority of the use of the bike must be for commuting, but where an employee cycles from home to a railway station, leaves his/her bike locked there, then cycles from the other end of his rail commute to the office, he/she can have a bike for each leg of the journey. Darned if I'd leave a bike locked up at a station overnight, but I suppose it's conceivable that he/she could leave it with a trusted friend near the station. Unless the employer company has a credit licence, the overall amount of the loaned equipment must not be over £1000. Two bikes of £500 each would be possible therefore...

DickBarton - SpecialFinanceAgent

[your forum name always reminds me of my Dad who used to whistle the theme tune ALL the fookin time]

I'm not sure what Oliver had in mind

Pretty much what you listed--that employees would buy things not allowed under the scheme.

Interestingly, the rules do allow the purchase of two bikes (bet not many people knew that) in certain circumstances. The majority of the use of the bike must be for commuting, but where an employee cycles from home to a railway station, leaves his/her bike locked there, then cycles from the other end of his rail commute to the office, he/she can have a bike for each leg of the journey.

I didn't know that, either. That's great and shows that the scheme is thought through properly (in most areas, anyway)!

It's the transfer of ownership bit at the end that is a grey area, and I presume that is what worries him, rather than the main bulk of the scheme which is a government incentive.

Because selling the bike to the employee at the end changes the 'loan' agreement to a 'hire-purchase' agreement, this is not then liable for tax relief so, theoretically, all the savings would need to be paid back. In practice, this is accepted by HMRC and allowed to continue.

The market value is generally @ 5% of original purchase cost, but this is only a guideline because if it was set out in the scheme as a fact, we would be back to the H-P problem.

In summary, the scheme was put together a bit shonkily (it was originally for computers, not bikes), without getting tax exemption sorted, but it is widely used and accepted so I can't believe there would ever be any legal challenges to it.

In summary, the scheme was put together a bit shonkily (it was originally for computers, not bikes), without getting tax exemption sorted, but it is widely used and accepted so I can't believe there would ever be any legal challenges to it.

Isn't it also one of Gordon Brown's personal projects/ideas?

It's the way the agreement is written that determines whether it's a loan or hire purchase, not what happens to the bike at the end of the period. The loan must be written in such a way that there is no automatic entitlement for the employee to purchase the bike and equipment at the end of the loan. Have a look at the link someone posted above where it's all explained. I agree that the value of the sale to the employee is a tricky area.

The tune goes through my mind as well.

Ah yes seem to remember a receipt was needed - the point was that you could buy e.g. panniers, bags, mudguards etc. on the scheme. And also sale bikes - if you go into evans and do the scheme through them they'll only let you do it on full price bikes. I think it's also a risk that to an extent manages itself- e.g. if you want to go into Evans and spend £500 on clothing chances are you won't be riding a unipack...

The transfer of ownership thing seems to be a sticking point for the guy here. As it's pretty much assumed that the bike will be sold to the employee at the end, and it's very unrealistic to think otherwise, he sees the 'substance' of the process to be a hire purchase.

It's a bit annoying. I can give links to proof of the validity of this thing til I'm dead from trying, but there seems to be some unspoken desire against the thing that I suspect I won't get past.

It's fun looking into what counts as 'safety equipment' - I rang cyclescheme to check this the last time I did it and it basically amounted to anything that's useful to have on a bike, unless it's bike upgrades. I ended up with panniers, lights, shorts, socks, etc. My mate was gutted because he couldn't upgrade his bikes. Weird that bib shorts can be 'safety equipment', while brakes can't...

I remember speaking to the person who runs our scheme about this - if the company wants to run it as a hire scheme, then fine - they will end up with an increasing stock of bikes after they have been used for a year. Oddly enough, my place didn't , hence a small charge at the end to transfer ownership. Co-incidentally, if you don't want the bike after a year, and relinquish the hire, there is a "transaction fee", which is the same as the purchase price.

So on the one hand you have a push from the company which doesn't want to open up a secondary line in used bike sales, and a pull from the employee who wants the bike, so surely everyone's happy? Apart from, it appears, your finance guy.

BTW my brother tried to get his through at his company but got mired in finance messing around.

Edinburgh bikes (in scotland and north england) are really good. They've got a guy in their offices dedicated to sorting it out and it all went really smoothly with my bike / company. They've got a good selection of fixed bikes too: Bowerey, langster, charge, fixie inc, surly and their own brand revolution too. The only thing that annoyed me slightly is that you can buy parts on top of a complete bike but you can't buy a frame and parts that sum up to a complete bike.

I couldn't get a any of the above in a small without a long wait though, so I bought a large surly steamroller which was on offer for £440. My company were fine with me selling the frame / forks and getting a BJ. All in all I've got a sweet little bob jackson for £500 - absolute bargain!

@.ptn

"8) Can the employee keep the cycle at the end of the loan period?
There should be no automatic entitlement for the employee to take ownership of the cycle and cyclists' safety equipment at the end of the loan period. If the loan agreement (technically a hire agreement under the Consumer Credit Act 1974 (CCA)) allows for ownership of the cycle and cyclists' safety equipment to pass to the employee upon the exercise of an option, the doing of any other specified act by either party to the agreement, or the happening of any other specified event, the resulting agreement is likely to be hire purchase in which case the tax exemption available for a loaned cycle may not be available.
However, at the end of the loan period, the employer may choose to give the employee the option to purchase the equipment. Typically this would be offered at substantially less than the original value of the equipment, but to prevent a taxable benefit in kind arising as a result of the transfer of ownership the employee must pay the employer the fair market value of the equipment. No tax relief is available to the employee for the purchase so, where the price is recovered from salary, it must be deducted from their net salary. VAT will also be payable on the purchase price by the employee on the supply by the leasing company or the employer as owner of the equipment.
Alternatively, the employer may wish to allow their employees to continue to use the cycles and cyclists' safety equipment you have supplied after the initial loan period has ended, without transferring ownership. As long as the employee continues to meet the conditions of the tax exemption (see section 4 above) no tax charge will arise."

From the link I gave above. Doesn't come any clearer than that to me.

Anyone used the CycleSurgery scheme? we've just got it set up at work... how flexible are CS with ordering stuff in that they don't stock?

Halfords can order ANY bike on the cycle to work scheme!

not quite - I asked them to order me a PlanetX but they said they can't. Like the look of the boardman but not really what I wanted.