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

Now, I've not been involved in the cycle scheme but as an IT lessor we were heavily involved in the very similar home computer scheme, and by similar I mean it works the same way. It's not new, there are other schemes out there including childcare and of course the original pension scheme where the whole matching up of salary sacrifice and a non-taxable benefit was done.

Employers are right to be cautious about the fair value at the end because HMRC have made noises about it in the past, though I think that now enough schemes have come to an end to get away with this. A good point was made earlier about getting HMRC to rubber stamp your scheme, but the rather large downside to this is that it does have to be up and running first and if HMRC don't like it then you have a problem. Actually the employers should not be transferring title to the employees - this isn't allowed no matter what government website links you might have read, its a basic tax law point. You can get around this by having the owner of the cycle (which is probably the cycle scheme) sell the bike directly to the employee for fair value.

However, the risk to employers is not that, and it's not the admin hassle, it's the problem with employees who leave employment during the scheme - or for example get their bike nicked in month one and then refuse to pay. What happens is that the employer gets left holding the baby and all of their savings in NI go down the pan. I've seen this happen a number of times and its why some of the public organisations are balking - refer back to the post at the start of this thread where such an organisation was refusing to do salary sacrifice schemes, I can pretty much guarantee that its because they've had their fingers burnt this way.