Cycle salary sacrifice frustrations - just me?

[Prawo Jazdy]

Recently I have been getting excited about being able to buy more bike than I was originally intending to, thanks to cycle schemes. My work’s benefit site was down for weeks, so I was waiting with anticipation for it to reopen so that I could get something. Well, I’m deflated. My work uses cycle2work, which gives access to the many turds that Halfords offer, Tredz, Cycle Republic, and some vague suggestion of “independents” without listing who. Work set a seemingly arbitrary limit of £2000.

Now, I know that is a reasonable selection in many ways, and that I have no divine right to a tax-free leisure purchase, but here’s what I find frustrating:

- Why are there so many different schemes? I can’t see a sensible reason why there isn’t one scheme which every bike retailer can sign up to if they wish.

- If the £1000 limit has been lifted, why are companies able to impose their own limits? Frankly is it any of their business what an employee wants to spend on a bike? It isn’t coming out of their pocket, so why stick their oar in?

- If you’re going to do something as random as allow companies to impose a restriction, why would you remove the ability to pay the extra in full? As in, £2000 limit, but you want a £2200 bike, so you use a £2k voucher and pay £200 cash.

This all reduces choice and flexibility massively. I had a range of options from different manufacturers at different budgets, all with excellent reviews. Unfortunately none of those can be purchased with this scheme, so grump grump grump

[ukaskew]

I went through a similar issue with my workplace, basically if there appears to be some arbitrary restriction it's more than likely due to taxation or finance regulations. They did explain why you couldn't 'top up' even if the bike was a penny over the limit, and also why some retailers have specific limits.

As far as I could understand it was all basically due to the govt making the system far more complex than it needs to be.

My workplace has just upped to £3k but it took quite a bit of time to sort the necessary paperwork to lift the £1k limit that was in place before.

[Steve vRS]

I don’t bother with my work scheme as like the OP’s I am limited to Halfords and £1000. This is fine for many users but for real tax avoiders like me, I want to buy a set of CX race wheels from an independent retailer, tax free, and I can’t

[anonymous-user]

My limit was recently upped to 3k
There is a partner store, but also a very long list of independent shops
I’m still resisting, but proving difficult

[Pothole]

Steve vRS said:

I don’t bother with my work scheme as like the OP’s I am limited to Halfords and £1000. This is fine for many users but for real tax avoiders like me, I want to buy a set of CX race wheels from an independent retailer, tax free, and I can’t

Good.

[Norgles]

Companies usually impose a limit to protect themselves and their employees against people who leave their business while still in the scheme.

Imagine you bought a bike for £6k on C2W and then left your work 2 months after. If you were in the 20% tax bracket you would still have something like £5k pre tax (£4K post tax) to pay. Your work would look to take this remaining balance from your last pay packet to clear the debt but chances are you would not have that amount of pay so they would then need to come after you to get the remaining balance and your final pay would be a net of zero. This is a major hassle for both the employee and employer. So most do it to avoid this situation.

Hope this helps!

[Norgles]

Meant to add C2W schemes are good for employers as they save on their NI contributions by approx 14%. Imagine if everyone in a large company bought a bike, the savings for businesses could be significant so it is is win win for employees and employers.

[anonymous-user]

Prawo Jazdy said:

- If the £1000 limit has been lifted, why are companies able to impose their own limits? Frankly is it any of their business what an employee wants to spend on a bike? It isn’t coming out of their pocket, so why stick their oar in?

Cash flow. It is coming out of their pocket.

If you decide to drop £10k on a bike, I as the employer have to purchase your £10k voucher in full. I then get it back from you, drip fed out of your payslip.
What happens if I have 5 employees who are all keen cyclists who want that £10k bike? It hits the company's bank balance.

[2gins]

The main issue I noticed with my scheme, which I think is C2W (Halfords etc options) is that it appeared to be a leaseback scheme, i.e. you don't actually own the bike until it's paid off and then there's the option to return it and start again or pay a final installment. I didn't look at it too closely if I'm honest, because I knew what I wanted and it wasn't available easily from Halfords. So I waited for the sales and was lucky to find an ex-demo model not much more than half price. Which I now own outright.

[Prawo Jazdy]

Thanks for the replies - some aspects I hadn’t properly considered. The company I work for has quite a wide spread of salaries, but the same scheme applies to all, so this probably explains the limit.

I still don’t really know why there are so many schemes though. Any thoughts?

First world* problems, eh?

(*at time of writing)

[Norgles]

Mac. said:

Cash flow. It is coming out of their pocket.

If you decide to drop £10k on a bike, I as the employer have to purchase your £10k voucher in full. I then get it back from you, drip fed out of your payslip.
What happens if I have 5 employees who are all keen cyclists who want that £10k bike? It hits the company's bank balance.

This is not true it is the cycle to work scheme provider that carry the debt not the employer

[Norgles]

Prawo Jazdy said:

Thanks for the replies - some aspects I hadn’t properly considered. The company I work for has quite a wide spread of salaries, but the same scheme applies to all, so this probably explains the limit.

I still don’t really know why there are so many schemes though. Any thoughts?

First world* problems, eh?

(*at time of writing)

There are several companies because they make around £100 per bike bought, with the volume of bikes purchased this way it is big business. Look at some of the more price aggressive bike manufacturers out there such as Planet X who operate on small margins. They no longer support C2W as the £100 cut that the C2W scheme provider takes eats massively into their already slim margins.

[Evanivitch]

2gins said:

The main issue I noticed with my scheme, which I think is C2W (Halfords etc options) is that it appeared to be a leaseback scheme, i.e. you don't actually own the bike until it's paid off and then there's the option to return it and start again or pay a final installment..

Bingo. Which is why you can't "top up". Because then you'd have equity in something you don't actually own at that point.

It's all horribly over complicated for what is, in effect, an abused system.

[Prawo Jazdy]

Ah, now I understand.

I was never going to do my 29 mile commute on a trail bike anyway, so it would have been immoral.

[anonymous-user]

Norgles said:

This is not true it is the cycle to work scheme provider that carry the debt not the employer

You are wrong I’m afraid, I’m an employer and this is how our scheme works;

Cyclesheme said:

The employee visits their local bike shop or browses online to decide what they want; they then apply via the Cyclescheme website. The employer reviews their request and if they are eligible pays for the equipment.

Cyclescheme said:

The employee receives their bike and starts their salary repayments. After 12 months the employer will have recovered their costs and generated up to 13.8% in savings. The employee will be given their ownership options.

https://www.cyclescheme.co.uk/employers

Also:

Bike2WorkScheme.co.uk said:

The scheme is free of charge to set up and costs nothing to run. The Employer makes the initial purchase and then leases the bike/equipment to the Employee via a salary sacrifice, until the full amount is recovered. Employers typically save up to 13.8% of the total value of the salary sacrifice total per Employee in Employers NI contributions.

https://www.bike2workscheme.co.uk/employer/faqs

Edited by anonymous-user on Thursday 12th March 23:27

[CAPP0]

Mac. said:

Norgles said:

This is not true it is the cycle to work scheme provider that carry the debt not the employer

You are wrong I’m afraid, I’m an employer and this is how our scheme works;

I spent £3k on the cycle scheme recently and my certificate was explicitly not released until my employer paid for it (which they did very quickly, I think I went from test-rides and selection to riding it home in about 7 days).

[cml24]

Pothole said:

Steve vRS said:

I don’t bother with my work scheme as like the OP’s I am limited to Halfords and £1000. This is fine for many users but for real tax avoiders like me, I want to buy a set of CX race wheels from an independent retailer, tax free, and I can’t

Good.

I'm going to have to agree with this response. The point of the scheme, is to allow people who don't cycle to buy a reasonable bike that allows them to commute by bike.

I don't know how many people actually use it for this purpose, but if it's limited to shops like Halfords (where you can buy a reasonably priced commuter bike) then no issue from me!

I've heard before a company can up the limit from a thousand pounds they have to do affordability checks to confirm all their employees can take advantage of the potentially higher upper limit. I guess some never bother doing the calc.

[Norgles]

CAPP0 said:

Mac. said:

Norgles said:

This is not true it is the cycle to work scheme provider that carry the debt not the employer

You are wrong I’m afraid, I’m an employer and this is how our scheme works;

I spent £3k on the cycle scheme recently and my certificate was explicitly not released until my employer paid for it (which they did very quickly, I think I went from test-rides and selection to riding it home in about 7 days).

Interesting. I too am an employer and have a background in this industry. Our scheme does not work that way. Who you both using?

[anonymous-user]

We use Cyclescheme

[loskie]

I can access this through cycle solutions and to me it appears pretty decent, a shame for my LBS though. What if any affect does it have on one's pension? I work for HM Gov.