Bike to work scheme - is it worth it?
Discussion
So I can get 40% off when tax and NI are taken into account and spend £1000.
I've bought an old GE Bates 70's/80's road bike which is light as a feather but to be honest could do with a full refresh of wheels, chainset, brakes, handlebars and stem etc if it was to be put back to tip top condition, although I can get away with new wheels for now as the originals are not amenable to spoke tightening and plink-plonked out again.
Can I get a top quality bit of kit for a grand if I go the bike to work scheme route or am I better off putting my hard earned into my old Bates bike?
I don't really want anything fragile like carbon (but assume all that stuff costs tons of money anyway) and I don't need to be looking to shave nanoseconds off times, but lightweight and skinny wheels are a must as I don't seem to be able to get anywhere on hybrids and mountain bikes. That's been the big bonus with the Bates bike - I'm actually going places on it instead of just feeling like death after going up the hill where I live and stopping.
I'm not athletic and although I've got back up to an 8 mile ride once a week now plus 2 miles in the evenings I've got a moderate beer belly to shift and do not possess any lycra.
Would appreciate some advice.
Cheers,
Joe
I've bought an old GE Bates 70's/80's road bike which is light as a feather but to be honest could do with a full refresh of wheels, chainset, brakes, handlebars and stem etc if it was to be put back to tip top condition, although I can get away with new wheels for now as the originals are not amenable to spoke tightening and plink-plonked out again.
Can I get a top quality bit of kit for a grand if I go the bike to work scheme route or am I better off putting my hard earned into my old Bates bike?
I don't really want anything fragile like carbon (but assume all that stuff costs tons of money anyway) and I don't need to be looking to shave nanoseconds off times, but lightweight and skinny wheels are a must as I don't seem to be able to get anywhere on hybrids and mountain bikes. That's been the big bonus with the Bates bike - I'm actually going places on it instead of just feeling like death after going up the hill where I live and stopping.
I'm not athletic and although I've got back up to an 8 mile ride once a week now plus 2 miles in the evenings I've got a moderate beer belly to shift and do not possess any lycra.
Would appreciate some advice.
Cheers,
Joe
There are a number of schemes, which will dictate the shops you can use.
My company is on cyclescheme.co.uk & personally I think its a great scheme. Although others will disagree!. I'm now on my 3rd bike via the scheme & the savings are great. There are other deposits & smallprint accessable via their websites but the saving is around 40% for me.
If your scheme is the cyclescheme.co.uk one, a few sites wothe looking at are Ribble cycles, Planet X & now Evans cycles have signed up to cyclescheme.co.uk (and their sale bikes can be purchased on the scheme). I saw a Sabbath titanium bike under a grand on the Evans site last week, seems to have gone now though!
My company is on cyclescheme.co.uk & personally I think its a great scheme. Although others will disagree!. I'm now on my 3rd bike via the scheme & the savings are great. There are other deposits & smallprint accessable via their websites but the saving is around 40% for me.
If your scheme is the cyclescheme.co.uk one, a few sites wothe looking at are Ribble cycles, Planet X & now Evans cycles have signed up to cyclescheme.co.uk (and their sale bikes can be purchased on the scheme). I saw a Sabbath titanium bike under a grand on the Evans site last week, seems to have gone now though!
Edited by anonymous-user on Monday 3rd October 09:11
I was looking into joining our scheme but didn't for the following reasons :
- It was Halfords only
- You don't own the bike for the period of the lease (so you can't modify it etc)
- The end payment to buy it (on a £500+ bike) is now 25% of the price when new. Some schemes are different and offer extended terms but the taxman is adamant that it should be a lease and not a benefit
- You have to do 50% of the distance you put on the bike by commuting. I'm looking for a new MTB and work 25 miles from home so this is not going to happen. They may not check but it was another nail in the coffin.
As well as all this the bikes I'm looking at all have 20% or more off them as the new 2012 bikes come in so wouldn't really be saving much anyway if anything at all
- It was Halfords only
- You don't own the bike for the period of the lease (so you can't modify it etc)
- The end payment to buy it (on a £500+ bike) is now 25% of the price when new. Some schemes are different and offer extended terms but the taxman is adamant that it should be a lease and not a benefit
- You have to do 50% of the distance you put on the bike by commuting. I'm looking for a new MTB and work 25 miles from home so this is not going to happen. They may not check but it was another nail in the coffin.
As well as all this the bikes I'm looking at all have 20% or more off them as the new 2012 bikes come in so wouldn't really be saving much anyway if anything at all
Gren said:
I was looking into joining our scheme but didn't for the following reasons :
- It was Halfords only
- You don't own the bike for the period of the lease (so you can't modify it etc)
- The end payment to buy it (on a £500+ bike) is now 25% of the price when new. Some schemes are different and offer extended terms but the taxman is adamant that it should be a lease and not a benefit
- You have to do 50% of the distance you put on the bike by commuting. I'm looking for a new MTB and work 25 miles from home so this is not going to happen. They may not check but it was another nail in the coffin.
As well as all this the bikes I'm looking at all have 20% or more off them as the new 2012 bikes come in so wouldn't really be saving much anyway if anything at all
Who would know if you modify it?, nobody checks! All 3 of mine are modified by me.- It was Halfords only
- You don't own the bike for the period of the lease (so you can't modify it etc)
- The end payment to buy it (on a £500+ bike) is now 25% of the price when new. Some schemes are different and offer extended terms but the taxman is adamant that it should be a lease and not a benefit
- You have to do 50% of the distance you put on the bike by commuting. I'm looking for a new MTB and work 25 miles from home so this is not going to happen. They may not check but it was another nail in the coffin.
As well as all this the bikes I'm looking at all have 20% or more off them as the new 2012 bikes come in so wouldn't really be saving much anyway if anything at all
CycleScheme end payment is not 25%. You pay 7% after a year on a £1000 bike & ride it for 3 more years then its yours (all in the smallprint which you have to read) Some companies interpret the rules differently, maybe yours is particularly mean!
Nobody checks the distance you ride. Partial journeys are allowed on my scheme.
You can buy Evans bikes at the sale prices via CycleScheme. Last week I saw a Sabbath Titanium bike reduced from £2200 to £900. It would have cost me around £500 on the scheme but wrong size!
I realise nobody is going to check the modifications or distances just felt it swung the deal for me personally when the financial incentives weren't so great and the bike selection wasn't up to much.
The 25% though is the latest guideline which apparently replaces the 7% - you can still pay only 7% if you keep the bike for 4 years at which point it becoems yours. Has only come in during the last year : http://www.cyclescheme.co.uk/employers/employer-up... . Some places may 'interpret' the rules differently - I think they are just guidelines to ensure you pay a 'fair value' so it isnt seen as a benfit in king and hence taxable.
If you're keeping the bike a while and are happy for it not to be yours over that time then the savings are still there
Evans cycles have one of the best deals and do allow you to extend the lease and get the bike eventually for free, they also allow you to get one of their sale bikes. The Halfords setup is nowhere near as flexible.
All I know is that I went in thinking I can get a bike almost half price and it turned out in my instance not to be so good a deal. Some schemes may be better but all seem to be tightening up.
The 25% though is the latest guideline which apparently replaces the 7% - you can still pay only 7% if you keep the bike for 4 years at which point it becoems yours. Has only come in during the last year : http://www.cyclescheme.co.uk/employers/employer-up... . Some places may 'interpret' the rules differently - I think they are just guidelines to ensure you pay a 'fair value' so it isnt seen as a benfit in king and hence taxable.
If you're keeping the bike a while and are happy for it not to be yours over that time then the savings are still there
Evans cycles have one of the best deals and do allow you to extend the lease and get the bike eventually for free, they also allow you to get one of their sale bikes. The Halfords setup is nowhere near as flexible.
All I know is that I went in thinking I can get a bike almost half price and it turned out in my instance not to be so good a deal. Some schemes may be better but all seem to be tightening up.
Edited by Gren on Monday 3rd October 13:11
Gren said:
I realise nobody is going to check the modifications or distances just felt it swung the deal for me personally when the financial incentives weren't so great and the bike selection wasn't up to much.
The 25% though is the latest guideline which apparently replaces the 7% - you can still pay only 7% if you keep the bike for 4 years at which point it becoems yours. Has only come in during the last year : http://www.cyclescheme.co.uk/employers/employer-up... . Some places may 'interpret' the rules differently - I think they are just guidelines to ensure you pay a 'fair value' so it isnt seen as a benfit in king and hence taxable.
If you're keeping the bike a while and are happy for it not to be yours over that time then the savings are still there
Evans cycles have one of the best deals and do allow you to extend the lease and get the bike eventually for free, they also allow you to get one of their sale bikes. The Halfords setup is nowhere near as flexible.
All I know is that I went in thinking I can get a bike almost half price and it turned out in my instance not to be so good a deal. Some schemes may be better but all seem to be tightening up.
mine is through the halfords scheme but the bike doesn't have to be from halfords, if you phone them up they will source ANY bike within your budget (I had a specialized allez) my final settlment/disposal fee is £35 although this was over a year ago and they have never checked anything to do with the bike or the use of it, worst case scenario I'd just tell them it was stolen. My dad finished his scheme early due to medical retirement and he just had to make the remaining payments to keep the bike but that was even longer ago. Royal Mail scheme btwThe 25% though is the latest guideline which apparently replaces the 7% - you can still pay only 7% if you keep the bike for 4 years at which point it becoems yours. Has only come in during the last year : http://www.cyclescheme.co.uk/employers/employer-up... . Some places may 'interpret' the rules differently - I think they are just guidelines to ensure you pay a 'fair value' so it isnt seen as a benfit in king and hence taxable.
If you're keeping the bike a while and are happy for it not to be yours over that time then the savings are still there
Evans cycles have one of the best deals and do allow you to extend the lease and get the bike eventually for free, they also allow you to get one of their sale bikes. The Halfords setup is nowhere near as flexible.
All I know is that I went in thinking I can get a bike almost half price and it turned out in my instance not to be so good a deal. Some schemes may be better but all seem to be tightening up.
Edited by Gren on Monday 3rd October 13:11
I'm really not sure it's worth it anymore...
I bought a bike through the old scheme 6 years ago. I had to buy through Halfords, but at the time, knowing little about bikes I was OK with that, but it was very flexible. I ordered £900 worth of vouchers through work, to be repaid over 3 years 0% and pre-tax, so I only paid back about half of it.
Between ordering the vouchers and them turning up the price of the bike fell to £650, but Halfords didn't mind, said I could spend the rest on whatever I likes, so I odered from ebach suspesion springs for a Golf I had at the time with the rest.
After 3 years, I had an oddly worded letter from work which in a roundabout way said the bike's value had now fallen to £0 and transferred ownership to me, no fees or anything.
I could be wrong, but now I'm told:
You have to pay RRP, no discounts - with most places offering the option of 0% finance, the cost of this finance is built into the RRP.
You can't have it on finance, so you're 'over paying' for it, as most places will offer some sort of discount for 'cash'.
Even more so now, because most 2011 bikes are being offered with a discount of 10-20%
The goverment has set the depreciation levels for bikes, the levels seem pretty reasonable to me, but you have to pay tax on the back-end which eats into some of the value.
So to me, it adds a lot of faf factor and a smaller choice of bikes for very little discount full-term.
I bought a bike through the old scheme 6 years ago. I had to buy through Halfords, but at the time, knowing little about bikes I was OK with that, but it was very flexible. I ordered £900 worth of vouchers through work, to be repaid over 3 years 0% and pre-tax, so I only paid back about half of it.
Between ordering the vouchers and them turning up the price of the bike fell to £650, but Halfords didn't mind, said I could spend the rest on whatever I likes, so I odered from ebach suspesion springs for a Golf I had at the time with the rest.
After 3 years, I had an oddly worded letter from work which in a roundabout way said the bike's value had now fallen to £0 and transferred ownership to me, no fees or anything.
I could be wrong, but now I'm told:
You have to pay RRP, no discounts - with most places offering the option of 0% finance, the cost of this finance is built into the RRP.
You can't have it on finance, so you're 'over paying' for it, as most places will offer some sort of discount for 'cash'.
Even more so now, because most 2011 bikes are being offered with a discount of 10-20%
The goverment has set the depreciation levels for bikes, the levels seem pretty reasonable to me, but you have to pay tax on the back-end which eats into some of the value.
So to me, it adds a lot of faf factor and a smaller choice of bikes for very little discount full-term.
Whether it's worth it or not depends on your scheme. I got royally shafted with mine that's just finishing due to the change in HMRC guidance on end values.
My initial terms and conditions:
“The selection will be disposed of at the end of the term of this Hire Agreement for a nominal sum, equating to fair market value at that time usually £20 (plus VAT) or 5% of the capital value (plus VAT) whichever is greater.”
The revised terms and conditions state an end value (to pay to take owership of the bike) of 18% or 25% of initial value depending on initial cost of <£500 or >£500 respectively.
On my £800 bike, I expected to pay:
£52.07 x 12 = £624.84
plus an end payment of 5% plus VAT = £48.00
But I'm actually now paying a lot more
If I'd known the T&Cs could be changed then I'd never have signed up to it in the first place. What's all the more galling is that I actually use my bike-to-work bike to get to work! (unlike some folk I know).
My initial terms and conditions:
“The selection will be disposed of at the end of the term of this Hire Agreement for a nominal sum, equating to fair market value at that time usually £20 (plus VAT) or 5% of the capital value (plus VAT) whichever is greater.”
The revised terms and conditions state an end value (to pay to take owership of the bike) of 18% or 25% of initial value depending on initial cost of <£500 or >£500 respectively.
On my £800 bike, I expected to pay:
£52.07 x 12 = £624.84
plus an end payment of 5% plus VAT = £48.00
But I'm actually now paying a lot more
If I'd known the T&Cs could be changed then I'd never have signed up to it in the first place. What's all the more galling is that I actually use my bike-to-work bike to get to work! (unlike some folk I know).
a11y_m said:
Whether it's worth it or not depends on your scheme. I got royally shafted with mine that's just finishing due to the change in HMRC guidance on end values.
My initial terms and conditions:
“The selection will be disposed of at the end of the term of this Hire Agreement for a nominal sum, equating to fair market value at that time usually £20 (plus VAT) or 5% of the capital value (plus VAT) whichever is greater.”
The revised terms and conditions state an end value (to pay to take owership of the bike) of 18% or 25% of initial value depending on initial cost of <£500 or >£500 respectively.
On my £800 bike, I expected to pay:
£52.07 x 12 = £624.84
plus an end payment of 5% plus VAT = £48.00
But I'm actually now paying a lot more
If I'd known the T&Cs could be changed then I'd never have signed up to it in the first place. What's all the more galling is that I actually use my bike-to-work bike to get to work! (unlike some folk I know).
Not sure what scheme yours is, but it doesn't look rightMy initial terms and conditions:
“The selection will be disposed of at the end of the term of this Hire Agreement for a nominal sum, equating to fair market value at that time usually £20 (plus VAT) or 5% of the capital value (plus VAT) whichever is greater.”
The revised terms and conditions state an end value (to pay to take owership of the bike) of 18% or 25% of initial value depending on initial cost of <£500 or >£500 respectively.
On my £800 bike, I expected to pay:
£52.07 x 12 = £624.84
plus an end payment of 5% plus VAT = £48.00
But I'm actually now paying a lot more
If I'd known the T&Cs could be changed then I'd never have signed up to it in the first place. What's all the more galling is that I actually use my bike-to-work bike to get to work! (unlike some folk I know).
Here is what this one charges a basic tax payer, even greater savings for higher rate tax payers...
http://www.cyclescheme.co.uk/calculator
Total cost of bike and accessories: £800
Net cost of bike and accessories, including finance and admin costs (if applicable): £800
Income tax saving over hire period: £160
NI saving over hire period: £96
Final cost of bike & accessories: £544
Total saving:** £256
Gross salary sacrifice, based on 12 month hire period (this should be the figure displayed on your hire agreement): £66.67
Net salary sacrifice, based on 12 month hire period: £45.33
Percentage saving over RRP: 32%
So the £800 bike is £544
£45.33 a month for 12 months. Easy to get past the 'home accountant!'
After a year you pay a 7% deposit to cyclescheme (£56). Your companies involvement stops at that point. You can get another then if you want.
Ride the bike for 3 years & they sign it over to you
So the £800 bike has cost you £600 ( or only £520 including the 7% deposit if higher rate tax payer )& you can buy sale bikes in the scheme from most online shops such as Evans.
Perhaps some schemes or companies interpretation are not as competitive.
Edited by anonymous-user on Tuesday 4th October 13:36
the maximum on ours is £500 through halfords but they will find bikes halfords don't sell if you call them and the disposal fee is the same weather you keep the bike or five it back
Gross Costs
18 Monthly Gross Salary Reductions of: £ 25.08
Collection and Disposal Charge: £ 34.27
No advance payment is required. You hire a bicycle and bicycle safety equipment for a fixed period of 18 months. At the end of the Period of Hire you will be charged a collection and disposal fee of £35 (from net pay). Example based on you selecting a monthly paid £500 Letter of Collection.
Lower Rate Taxpayer Costs
18 Monthly Net Salary Reductions of: £ 17.05
Collection and Disposal Charge: £ 34.27
Lower Rate Taxpayer Total: £ 341.17
Higher Rate Taxpayer Costs
18 Monthly Net Salary Reductions of: £ 14.55
Collection and Disposal Charge: £ 34.27
Higher Rate Taxpayer Total: £ 296.17
Gross Costs
18 Monthly Gross Salary Reductions of: £ 25.08
Collection and Disposal Charge: £ 34.27
No advance payment is required. You hire a bicycle and bicycle safety equipment for a fixed period of 18 months. At the end of the Period of Hire you will be charged a collection and disposal fee of £35 (from net pay). Example based on you selecting a monthly paid £500 Letter of Collection.
Lower Rate Taxpayer Costs
18 Monthly Net Salary Reductions of: £ 17.05
Collection and Disposal Charge: £ 34.27
Lower Rate Taxpayer Total: £ 341.17
Higher Rate Taxpayer Costs
18 Monthly Net Salary Reductions of: £ 14.55
Collection and Disposal Charge: £ 34.27
Higher Rate Taxpayer Total: £ 296.17
swerni said:
I've just got another bike on our Evans cycle to work scheme.
I was a bit cynical about the changes, however now they allow the transference of contract to them at the end of the 13 months, in real terms it's no different.
There is one significant change coming down the line.
As of January you won't be getting the bike VAT free.
This means a £1000 voucher now only costs you £833 less the tax and NI benefits.
In the new year a £1000 will cost £1000 (less the mentioned benefits).
This scheme will go the same was as the "computers for home" one, so make the most whilst you can.
A question on this new VAT rule - does it mean that if you buy a bike now all monthly payments made before 1st January have the VAT taken off them, and then all payments after that have VAT added to them?I was a bit cynical about the changes, however now they allow the transference of contract to them at the end of the 13 months, in real terms it's no different.
There is one significant change coming down the line.
As of January you won't be getting the bike VAT free.
This means a £1000 voucher now only costs you £833 less the tax and NI benefits.
In the new year a £1000 will cost £1000 (less the mentioned benefits).
This scheme will go the same was as the "computers for home" one, so make the most whilst you can.
I thought that the VAT would be claimed back by the employer in one go and therefore can't be added to the payments as otherwise the employer would be making profit...
This was a great scheme two years ago when you could own the bike after 12 months with it being sold to you for an additional one month payment. Buy the right bike and you couldn't fail to sell for a profit.
Now HRMC t
ts have changed the rules - to buy after 12months costs you 25% of the purchase price or you 'rent it' for another IIRC 3 years where the monthly rental is nil. In other words you only techncially own it after 4yrs when it is likley to be worth significantly less than you have paid.
You can however take on another bike after the first 12 months (effectively having 2). Theorectically if you sold the first bike after the first year who would know? It could be an issue if the buyer comes to register it or has it stolen?
Now HRMC t
ts have changed the rules - to buy after 12months costs you 25% of the purchase price or you 'rent it' for another IIRC 3 years where the monthly rental is nil. In other words you only techncially own it after 4yrs when it is likley to be worth significantly less than you have paid.You can however take on another bike after the first 12 months (effectively having 2). Theorectically if you sold the first bike after the first year who would know? It could be an issue if the buyer comes to register it or has it stolen?
Zingari said:
This was a great scheme two years ago when you could own the bike after 12 months with it being sold to you for an additional one month payment. Buy the right bike and you couldn't fail to sell for a profit.
Now HRMC tts have changed the rules - to buy after 12months costs you 25% of the purchase price or you 'rent it' for another IIRC 3 years where the monthly rental is nil. In other words you only techncially own it after 4yrs when it is likley to be worth significantly less than you have paid.
You can however take on another bike after the first 12 months (effectively having 2). Theorectically if you sold the first bike after the first year who would know? It could be an issue if the buyer comes to register it or has it stolen?
And in a nutshell that is why the scheme is no longer as attractive as it once was. It's not meant to be a personal profiteering exercise!Now HRMC t
ts have changed the rules - to buy after 12months costs you 25% of the purchase price or you 'rent it' for another IIRC 3 years where the monthly rental is nil. In other words you only techncially own it after 4yrs when it is likley to be worth significantly less than you have paid.You can however take on another bike after the first 12 months (effectively having 2). Theorectically if you sold the first bike after the first year who would know? It could be an issue if the buyer comes to register it or has it stolen?
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