Cycle to Work Scheme
Discussion
How does it work exactly?
I know so much as you get a voucher to spend, and then pay back over a period.
But who actually funds the bike, is it the government?
The reason I ask is that I would love to try to get something organised for work, but cashflow would be a problem if 100 folks decided to apply.
Online searches have been devoid of information in this regard.
I know so much as you get a voucher to spend, and then pay back over a period.
But who actually funds the bike, is it the government?
The reason I ask is that I would love to try to get something organised for work, but cashflow would be a problem if 100 folks decided to apply.
Online searches have been devoid of information in this regard.
Im pretty sure the Employer pays and the Government covers the tax break you reclaim the payments monthly direct from salary 10 monthly installments, you can put a limit on the value of the bike say £1000 max, the employee can contribute extra.
Im sure if thats wrong someone will be along in a moment.
Im sure if thats wrong someone will be along in a moment.
The scheme where I work is run through Evans.
I know our administrator of the scheme said they were very helpful when he was setting it all up, so might be worth while asking them.
http://www.evanscycles.com/ride2work/employer-bene...
I know our administrator of the scheme said they were very helpful when he was setting it all up, so might be worth while asking them.
http://www.evanscycles.com/ride2work/employer-bene...
Inevitably the details are complex.
However, you (as a business) are buying bikes for your individual employees. When you buy a bike, the cost is from your gross revenues - your business now has another asset (a bike). You can reclaim the VAT (if applicable) and offset the purchase price against your company profits.
Your employees then (kind of) rent them from you for a period of typically between 1 and 5 years. This rental is taken from the employee's gross (of tax and NI) wages. In practice, the rental payments over the period tend to be equal to the purchase price of the bike though there is no reason why this would have to be the case.
At the end of the rental period the employee has an option to buy the bike from you. This payment would be from net wages. The longer the rental period, the less the residual value of the bike. (My company makes me pay the purchase price in equal installments over 1 year but the rental period extends to 5 years so the residual value is as small as possible.)
Most companies use one of the schemes set up for this purpose. But, I think, these are simply helpful from an admin point of view - there is no reason why the employer couldn't pop into the bike shop and hand over the company credit card.
However, you (as a business) are buying bikes for your individual employees. When you buy a bike, the cost is from your gross revenues - your business now has another asset (a bike). You can reclaim the VAT (if applicable) and offset the purchase price against your company profits.
Your employees then (kind of) rent them from you for a period of typically between 1 and 5 years. This rental is taken from the employee's gross (of tax and NI) wages. In practice, the rental payments over the period tend to be equal to the purchase price of the bike though there is no reason why this would have to be the case.
At the end of the rental period the employee has an option to buy the bike from you. This payment would be from net wages. The longer the rental period, the less the residual value of the bike. (My company makes me pay the purchase price in equal installments over 1 year but the rental period extends to 5 years so the residual value is as small as possible.)
Most companies use one of the schemes set up for this purpose. But, I think, these are simply helpful from an admin point of view - there is no reason why the employer couldn't pop into the bike shop and hand over the company credit card.
Bit awkward maybe - you could set a budget and allocate it on a first come basis. Then as you start the recovery process it would free up more money for others to come along from a waiting list.
Also are there barriers you could use - like withdrawals of car park permits etc - for recipients. You know some people won't use them after the first two days.
I was luckier - still spent about £15k though. And it was done on a self administered basis - buying from a couple of LBS's and saving the voucher admin fees. Totally self financing - if the cash flow is there to start with.
Also are there barriers you could use - like withdrawals of car park permits etc - for recipients. You know some people won't use them after the first two days.
I was luckier - still spent about £15k though. And it was done on a self administered basis - buying from a couple of LBS's and saving the voucher admin fees. Totally self financing - if the cash flow is there to start with.
wiggy001 said:
I thought the administrators got their money from a cut of the sale, not the employer?
One shop I went in recently, sales guy told me the company that administers the scheme takes 10%
They may do, but if as an employer we have to lay out say £1k per bike, cashflow is already tight, so while I guess all 100 employees wouldn't take up the scheme, the impact on cashflow could be substantial.One shop I went in recently, sales guy told me the company that administers the scheme takes 10%
As said I guess we could try to restrict it to a few per month, but even so, there would still be an impact.
If on the other hand there was a scheme where someone else did the financing, and as an employer we just collected the 'rent' on the financiers behalf, this would be different.
On a related note, what happens if the employee leaves before the end of the agreed term of 'rent'? As an employer I wouldn't want to be left with a number of bikes that no-one wanted, but if I am no longer paying the user a wage I have nothing to collect the 'rent' from.
daz3210 said:
On a related note, what happens if the employee leaves before the end of the agreed term of 'rent'? As an employer I wouldn't want to be left with a number of bikes that no-one wanted, but if I am no longer paying the user a wage I have nothing to collect the 'rent' from.
I think my agreement with my company is that, if I leave before the end of the rental period, I have to pay the outstanding balance (i.e. deducted from my final wages.Re the amounts you are suggesting, I don't think take-up is typically that big (as a proportion of employees). Many employees already have a bike if they are keen cyclists. Plus, £1,000 is the maximum (assuming you don't have a consumer credit licence) and many people will buy a bike costing much less than this. Once you take into account the tax advantages, the cash flow impact might be less than you thought.
All the answers are in cyclescheme.co.uk website. If in doubt give them a call! Great scheme, Im about to pick up my 3rd bike via them now. Can buy eg Evans sales bikes now so as a higher rate taxpayer I save approx 50% of that sale price (when taking extended rental). You can get a new bike every year if you wish..
Gassing Station | Pedal Powered | Top of Page | What's New | My Stuff