Urgent warning for anyone who has or is about to sign up to Cycle to Work

Long and the short of it for me is I bought into this scheme believing I was going to get around 40% off the price of a bike. I now just think of it as an interest free loan from my company - seems to work out to about that.

An interest free 1 year loan, not too bad really eh? There have always been loads of loopholes within the scheme. We have sold all types of equipment to almost every cycle scheme customer, of which our shop has had thousands. we have also always allowed people to spend over £1k, explaining the risks involved if you loose your job within the year etc.

Bit of a shame that its changing, and that people who have already calculated the savings may loose out. It is however still a better way to buy a bike than paying outright.

tom.

Thanks for taking the time and trouble to go through all this.
I do like hearing from people who know their shit.
So if I get my Finance Director to charge me, say, 10% of MV, what are the chances of the taxman bothering to argue over that? Given that they'd have to devote time and energy to checking the claim.
Ta

tom.

Thanks for taking the time and trouble to go through all this.
I do like hearing from people who know their shit.
So if I get my Finance Director to charge me, say, 10% of MV, what are the chances of the taxman bothering to argue over that? Given that they'd have to devote time and energy to checking the claim.
Ta

Well, first off, if your company deliberately sold you something at less than its market value and you deliberately didn't declare it on your Tax Return/P11D, etc, that's pretty naughty. Think fraud/tax evasion; technically you could get a jail term, but in practise you'd have to be John Gotti for them to try and get you like that.

The arse covering bit out of the way, my personal (rather than professional) opinion is that they are probably never going to check, especially if the company is small. However, that said, they randomly review a certain number of payrolls each year to check that society as a whole is operating payrolls correctly.

Market Value is a very subjective thing, it involves willing but not motivated purchasers and sellers and is generally just a best guess. If you think that 10% is a fairer value than 25%, there is nothing to stop your work from selling you the bike at this amount, but it would be useful to have something on file to support that valuation.

A valuation from a bike shop would probably be good, or examples of ended auctions from eBay, but if you had a list of defects and photographic evidence, etc, that would be decent too.

Don't forget that you can have more than one bike from your work under the scheme (subject to the condition that it is "mainly used for work" i.e. commuting) so in some circumstances, depending on the employer's flexibility, you might keep accumulating bikes so that you don't buy any bike after one year. This does get a bit dodgy when you get past two bikes, as the multiple bike thing is meant to be one to get from your house to your local station, one to get from the London station to the office. Makes having seven a bit hard to justify.

Would there be any benefit to doing something along the lines of an operating lease?

so, in a nutshell:
an interest free loan to buy a bike, paid back at something quite affordable, at the end of the year you get given the options of:
1) buy at 25%
2) extend lease to 4 years at 4 years pay 7%
3) give bike back

is that right? it's early, i need a quick summary so that when i fight my corner in the new year i'm armed to the teeth with street knowledge.

Sounds right, at least that's how my HR are dealing with it. There's a link to details on bikeradar up-thread, iirc

yep, that's what i was basing it on.

just wanted my reading and comprehension skillz checkin.

Would there be any benefit to doing something along the lines of an operating lease?

It is an operating lease; if it was a finance lease (i.e. if you had the right to buy at the end of the lease, as opposed to your employer offering you the opportunity to buy) the salary sacrifice would be ineffective as it would be consideration ("money or moneys worth").

As for the 25%/7%/no bike thing, you need to look at what your scheme provider does. I'm not familiar with how all the schemes operate, so I couldn't say for sure what the best way around any charges would be.

I love it when Tom talks dirty...

I've just been told that I'll buy the bike for £1 or so when I leave and just have to pay tax on the savings I made over full retail price.

Does that seem ok? Not sure how much it will be yet, but accounts seem to think it won't be much.

I've just been told that I'll buy the bike for £1 or so when I leave and just have to pay tax on the savings I made over full retail price.

Does that seem ok? Not sure how much it will be yet, but accounts seem to think it won't be much.

That's fine. They should presumably give you a P11d showing the value, although the idea of them selling you the bike after you left is interesting (mainly because I can't remember if this would avoid the problem).

Not being very bright with the whole numbers/excel thing.... (I'm more Word and Powerpoint).... isn't it now looking like the ideal way forward is to find a couple of things in your contract which you do not take advantage of: say interest free loan for a season ticket + the ride to work scheme + say free nursery vouchers: and see if you can negotiate a replacement for those perks with the company re-embursing you for the purchase price of a/the bike - then putting it through as a one-off payment on PAYE?

I worked for a major global corporation, where the local Head of HR was a total grown-up, and he was always up for ways to keep employees motivated around pay and conditions. All it required was proof that such things were not of massive disproportionate benefit and he'd just authorize a letter changing your T&C's on the dropping of one set of benefits for another if you wanted to suggest it. tbh though it worked better when interest rates were higher.

That way you'd get the bike, to own, in return for the tax break on it, no taxable benefit either as all sorted through PAYE.

I received today e-mail from cyclescheme.co.uk that my hire period is finished and I have three options now: deposit, pay 25% or return. I started agreement with cyclescheme October last year and HMRC changed rules in August 2010. So why do I have to pay last payment by new rules?
Voucher value was almost a grand on which I’ve got Steamroller and accessories. If I knew that I have to repay almost everything I still buy the bike but cut on accessories. This seem a bit wrong to me. Also why I have to pay cyclescheme.co.uk and not my boss who paying my taxes?

Agreement and terms is 5 pages, but there is about Eligibility for tax benefits as long as I follow the rules (which I did).

Cyclescheme is so pointless, I think I saved 16%...

Ricochet, not sure, but you may be able to argue it out and try to extend the hire period.

I think this has to be done at the start of the hire period, but my work is now trying to standardise the hire period at 3 years with 7% purchase at end..

Cyclescheme have arranged a deal with HMRC to extend the "hire period" by 4 years. Deal is you pay something like 7% of the voucher value as a "continuation deposit", don't make any more payments, and at the end of the 4 years the value of the bike is ~7% of the purchase price - they then keep the 7% "deposit" and you keep the bike.

It's either that or pay the 18 or 25% now (depending on voucher value).....

I know at least 2 big companies that are doing this with cyclescheme.....seems like the best way forward to me!

I work for a large company, and they are doing the 7% depostit thing. Seems to me that they're trying to make the best out of a shit situation.

So in a practical sense, you pay 7% and pretend not to own the bike for a little while longer.

Good solution.

I work for a large company, and they are doing the 7% depostit thing. Seems to me that they're trying to make the best out of a shit situation.

So in a practical sense, you pay 7% and pretend not to own the bike for a little while longer.

Good solution.

Seems to be about the size of it!

• so what's this big society then?
  
• why, it's you ofcourse
  
• oh i see, can we have some money then?
  
• no, that's the point
  

There's been some clarification to the rules surrounding the buy-back price, apparently:
http://emails.cyclescheme.co.uk/files/hmrc/flyer.pdf

news
http://www.independent.co.uk/news/uk/home-news/cheap-cycles-benefit-us-all-says-report-2213113.html

Doesn't seem to be a standard approach to all this. I got my bike through work, a county fire service, and had two emails in two consecutive weeks in January. One said I could keep riding and pay nothing, give the bike back or pay X % of the bike value. Second one says I can give the bike back, pay £44 to keep it for three years or pay £155 to buy it outright. As I've paid out £454.32 on a £635 bike, £155 means I'll be £30 better off than if I'd paid cash. Do these figures seem about right to the rest of you?

Cycle to work is dead.

RIP

Basically it's always officially been a rental scheme, and you are supposed to pay the value the bike retains at the end of the rental period. Until now the schemes that did it right claimed the bikes were knackered and basically worthless... But recently the hmrc 'clarified' the values of bikes... Basically what your company are offering by charging you £44 for three years is to pay that amount and then the bike will essentially be worthless so then you will get it for next to nothing (assuming hmrc don't move the goal posts again by then!)...

Personally I'd be interested to know what your company would do with the bike if you said you weren't willing to pay and you'd return it. If you are friendly with someone in HR ask them, maybe you could arrange to walk past the dumpster they will no doubt be putting it in!