Ride to Work scheme

[CAPP0]

Can anyone please decipher for me, in simple terms that I would be able to understand, how the Ride to Work scheme actually works from a financial perspective?

I found a bike I want to buy, on the Evans website, priced at £2300. I'm a higher-rate tax payer. So, their online calculator gives me this result:



However, when I called the store to order the bike, the lady there tells me that the Ride to Work scheme is only valid up to £1000 and therefore my savings will actually only be about £400 - despite their own website telling me as above. That makes the bike a rather more expensive option.

I do have it in my head that there was a £1000 limit but I also heard that had been lifted?

Why would Evans put a calculator on their website which gives false indications? I'm sure there's a disclaimer somewhere which says "for illustration only" or similar, but if they're not taking into account the £1000 cap the it's miles off. In fact, I just went back and put in a bike valued at £5000, and it says it will cost me £2900, saving £2100.

What's the truth of the matter?

Thanks.

Edited by CAPP0 on Saturday 25th August 12:46

[anonymous-user]

Your company will need to tell you their limit.
I recall it’s £1000 by default, but if your company is a registered credit provider or something the limit can be higher.
I’m surprised it’s not clear from your own companies scheme t&c’s

[anonymous-user]

https://www.bikeradar.com/gear/article/everything-...

‘’Your employer buys the bike of your choice up to a value of £1,000, unless they hold a Consumer Credit licence, which ups the maximum to £4,500.’’

[daddy cool]

It depends on your employer - I'm two months into paying for my new bike, and originally they said the max limit was 1000. I said "oh, nevermind then , I have expensive tastes and it's 2300".
Then HR came back and said the Finance Director has approved the full amount.

[CAPP0]

Thanks for the replies, I shall ask tomorrow.

[snotrag]

The limit is £1000 unless your employer happens to have a consumer credit licence.

[mudnomad]

Could somebody explain it to me in simple terms - who is paying the difference/discount offered by this scheme?
Not a single person I've ever heard of using it, is unable to afford a bicycle. Everybody I know of, goes for some 2k+ bike.

[CAPP0]

snotrag said:

The limit is £1000 unless your employer happens to have a consumer credit licence.

Does that therefore mean that if they don't, I can get tax relief on the first £1000 (say £400) and that's the maximum I get off the bike price?

[daddy cool]

mudnomad said:

Could somebody explain it to me in simple terms - who is paying the difference/discount offered by this scheme?

I guess the government and/or the taxpayers!
It is funny though - I was totally honest with them and said "im buying a hardtail mountain bike which i'll be using for XC racing".
I already have a road bike should I choose to ride to work...

[ClassicMercs]

The absolute best is to do self administered - paperwork is on the web as a template. The voucher people have a 10% handling charge built in - Evans and Halfords is tied in. This is avoided and is a bargaining tool against price with the independents. The £1k limit is based upon whether your employer has a credit licence Living wage can be an issue in some cases - but not here.
If you can get your employer to buy the bike themselves - fill in some appropriate paperwork from the web - deduct from your payroll - then charge you a ''hire fee'' to hire for an ''extended period'' then you can have a 5k bike for a very agreeable price. And the employer wins as well - saved NIC covers the cost of finance and admin. The extended hire fee makes a profit (or you do like the NHS and ignore the rules here !!)
And the best time is to buy now on end of season deals. Bought a few this week.
90% of my riding is home to work - 3 miles to work and 30 miles home - thus qualifies. Take your pick - titanium road bike - e-bike - old hybrid - Brompton etc. I must ride some of them more often.

[anonymous-user]

CAPP0 said:

snotrag said:

The limit is £1000 unless your employer happens to have a consumer credit licence.

Does that therefore mean that if they don't, I can get tax relief on the first £1000 (say £400) and that's the maximum I get off the bike price?

No

[CAPP0]

Well, I've asked a whole bunch of people now and it's still as clear as mud.

My employer is registered with Cyclescheme, and is not a licenced credit broker (and never likely to be, we are only 45 people in a small service business), so I emailed Cyclescheme to ask them how it works, and got this back:

Cyclescheme said:

Thank you for your email and for your interest in the Cyclescheme.

Currently your employer offers you up to value of 1000.00 tax and NI free, however if your employer obtains authorization for the FCA they could offer you more through this scheme.

Also note that if your employer is not authorized to offer you more than 1000.00 you can still use the certificate to awards purchasing a more expensive bike by making a personal payment to the retailer at the point of redemption for the difference.

We advise you to obtain a quote from the retailer as you will be paying for it through your wages.

1000.000 certificate would allow you to make savings of 420.00 per year.

Your should expect your employer to make 12 monthly deductions of 83.33 allowing monthly savings of 35.00

Also please note that at the End of the initial 12 months hire you will be contacted to let you know that you must make a choice of payment to own the bike. Either 25% to own it outright or 7% to extend the agreement.

So I have to stump up the additional £1300 (for a £2300 bike) at point of purchase, then I save £420 but then have to pay 25% of what? The £1000, so, £250, or the bike price, £575? At best that makes my overall saving a maximum of £170, and whilst that's a pleasant evening out, it all seems to be a massive ballache. I get it that the scheme is mainly aimed at getting you onto a cheap treader to get to work and back, but it does seem to cut you off from buying anything better.

[Harpoon]

A £1000 bike is going to get to work pretty much as well as a £2300 bike - it is called Cycle to Work, not Get a Nice Bike on the Cheap.

You'll get bigger savings now bike shops are clearing MY18 bikes. Get a 0% credit card for 12 to 18 months interest free (most shops tell to pull 0% finance once the bike is discounted).

[CAPP0]

Harpoon said:

A £1000 bike is going to get to work pretty much as well as a £2300 bike

This would be true if anyone were selling a Bosch-powered mid-drive electric bike at £1000

[MrBarry123]

The deduction for the scheme - £83.33 for 12 months in the example of a £1k bike - is taken from your gross earnings. Therefore, the amount they say you "save" is compared with buying the bike from your net income.

[anonymous-user]

Plus nobody pays the 25% after a year
I was asked once & opted for the 7% to extend the ‘hire’ period a few years
But the last couple of times I wasn’t asked at all
So 1k Brompton costs me less than £600. No sale will come close, half decent used cost more!

[gianlu]

That 25pct and 7pct is just the t&c for cyclesheme. At work we did set it up ourselves, easy and you agree your own terms.

To be clear, your employer buys the bike, not you. It remains on the employers books. It can be sold after the initial 12 months at a fair market value (cyclescheme assumes 25pct). Or you can get an additional "lease" for a 6 years and a very low nominal amount (1/year). By then the asset will be written off in the books and you can buy it from 0.

It is a scheme with a company, it's not "just" a discount to buy a bike partly founded by the govern.

[CAPP0]

gianlu said:

That 25pct and 7pct is just the t&c for cyclesheme. At work we did set it up ourselves, easy and you agree your own terms.

To be clear, your employer buys the bike, not you. It remains on the employers books. It can be sold after the initial 12 months at a fair market value (cyclescheme assumes 25pct). Or you can get an additional "lease" for a 6 years and a very low nominal amount (1/year). By then the asset will be written off in the books and you can buy it from 0.

It is a scheme with a company, it's not "just" a discount to buy a bike partly founded by the govern.

Thanks, that makes sense. My company have already offered me a 0% loan for the balance, which is good, but they don't run the scheme themselves (I guess you have to register or something? I'm only the 3rd person in company history to have asked for this, so there's little benefit in them administering the scheme themselves I guess).

But the 25% thing is ridiculous - in principle I understand it, but in practice, even for a £1000 bike you'd be paying back well over half the tax you'd "saved".

[tigger1]

mudnomad said:

Could somebody explain it to me in simple terms - who is paying the difference/discount offered by this scheme?
Not a single person I've ever heard of using it, is unable to afford a bicycle. Everybody I know of, goes for some 2k+ bike.

I don't want to call bullst, but I know of very few people who have been able to get a bike for more than 1k on the C2W scheme - the vast majority (in my experience) are bought for just under 1k.

The saving is coming from the reduction in Tax / NI - there is no "extra" money being paid, just govt allowing you to sacrifice some salary to avoid paying tax/ ni, whilst at the same time purchasing a bike which will be 20% VAT.

It massively encourages people to buy bikes - now how many of those are then used (regularly) for commuting, I wouldn't like to say. I've bought 3 bikes on the scheme (over 10 years) - they have all been used for commuting to some degree.

[Usget]

CAPP0 said:

But the 25% thing is ridiculous - in principle I understand it, but in practice, even for a £1000 bike you'd be paying back well over half the tax you'd "saved".

Yeah - which is why nobody does it. Cyclescheme let you pay a "continued hire fee" of next to sod all to allow you to "rent" the bike for the next three years, after which the bike is considered worthless and you can keep it (or, amusingly, you still have the option of returning the bike to them!)

For your specific use case the scheme hits the law of diminishing returns. But say I want a £900 winter bike. I pay £75 a month gross, so £45 a month netto, plus the continued hire fee of £40ish - so £580 instead of £900. Worth the faff.

My company used to offer up to £3k on the scheme but they bumped it down to £1k a few years ago. Which, to be honest, i think is reasonable. Nobody can really claim they're riding a £3k bike to work.