Cycle to work schemes

[anonymous-user]

I'm starting my graduate job at Jaguar Land Rover in September and they operate the scheme and frankly I am very confused!

I have the special link to both Jaguar and Land Rover pages (they are separate strangely) and have been reading up and it says that you hire the bike and can then buy it off them after the 12 months of use? I thought Isaved 40% on the purchase price and paid back the full amount in monthly installments, then the bike would be mine. This doesn't seem to be the case.

Does anyone have any experience of doing this and buying the bike at the end of the 12 months? Am I still likely to save money? It all seems very vague, I would really like to know how much I am going to have to pay at the end and what the monthly payments are before I commit but it doesn't look like I can do that.

Thanks for any advice.

[stevieb]

The percentage you will save will depend on the taxband you pay.

Here is a examples if you earn 30k and pay 600 for a bike

Your tax calculation
Total cost of bike and accessories: £600
Net cost of bike and accessories, including finance and admin costs (if applicable): £600

Income tax saving over hire period: £120
NI saving over hire period: £72
Final cost of bike & accessories: £408
Total saving:** £192

Gross salary sacrifice, based on 12 month hire period (this should be the figure displayed on your hire agreement): £50
Net salary sacrifice, based on 12 month hire period: £34
Percentage saving over RRP: 32%

There is also a disposal/Tranfer fee (HMRC fair market value).

Typically for bikes upto 1 year it is 18% if the bike is less than £500, but 25% if the bike is purchased value is £500+

Some employers pay this HMRC fee but it is classified as a benefit and will be on you P11D (My employer pays the HMRC fee but i get taxed on this payment)


use the below calc to work out what you could save
http://www.cyclescheme.co.uk/calculator

Edited by stevieb on Wednesday 29th June 10:42

[jr6yam]

Slightly off topic, but I'm sure I read in Cycling Plus that if
your company has a consumer credit licence you can spend up
to £4K on a bike using the scheme
Does anyone know if this is fact; or just a dream I had

[anonymous-user]

So if I pay £34 a month for 12 months, I have paid back £408 to cover the cost of the bike haven't I? Does that mean it is now mine to keep or would there be a final payment as well?

I will try to find out about the disposal/transfer fee (is this the 'final' payment to make the bike mine?), it sounds like that could be a real deal breaker as I'm looking at buying a £1500 bike.

Thanks for the breakdown, that helped.

[Parrot of Doom]

Can't you pay it back over a longer period? That way the bike is worth less, you pay less.

[anonymous-user]

OOO just found the advanced option on the calculator. That could do with being quite a bit more obvious. Now we're talking, I can work this out properly

Damn, it looks like £1000 is the maximum allowed so I probably won't bother now. I already have a bike which I could commute on, but really fancied a new mountain bike which is £1500.

ETA: I wonder if I can pay the difference outright though.

ETA 2: I'm not suggesting that I would use my existing bike to commute on and the new one for recreation! I just realised it looked that way. I would use the new bike for commuting, but I do already own a bike for commuting should I not get a new one with the scheme.

Edited by MSTRBKR on Wednesday 29th June 11:31

[anonymous-user]

anonymous said:

[redacted]

Yes it was looking like I'd save 32% but then pay 25% of the value at the end for a bike over £500. So only a saving of 7%, not that amazing.

A friend of mine did this scheme with Red Bull F1 and I think they stumped up at the end. I hope JLR will do the same. Better leave this until September to find out what the deal is.

Thanks for the help everyone.

Edited by MSTRBKR on Wednesday 29th June 11:32

[stevieb]

HAve you got a Cycle to Work policy document at work? i would expect JLR to have one. My company has and it states clearly that they will pay the HMRC transfer fee at the end of the deal.

[anonymous-user]

stevieb said:

HAve you got a Cycle to Work policy document at work? i would expect JLR to have one. My company has and it states clearly that they will pay the HMRC transfer fee at the end of the deal.

I'm not sure because I haven't started yet! I only have contact with two recruitment people through email and a facebook group for the graduates at the moment. They told me JLR operate the scheme but I don't really want to hassle them with stuff like this because they're busy allocating us departments and helping us with housing which is much more important. I'll check the employee handbook though.

[danrc]

There is a lot of hear-say surrounding the Cycle to work scheme, havign just done it this is my experience.

I just got my Genesis Core 40 through the scheme at work. The bike costs £1100 so had to stump up the extra. You can't get bikes in the sale as it must be the RRP.

The first problem you may have is finding a shop that will let you spend over the £1000. Alpine Bikes in Aberdeen didn't have a problem with me spending over £1000 as long as i made up the difference. Edinburgh bike shop wouldn't do that.

The scheme takes the money out of your Gross not NET so you save money there.

After you have made payments for 12 months, you are then given a choice - pay 25% of the ammount paid through the scheme (In your case 25% of £1000) or take out an extended loan period. This is usually another 2 years. In this period you pay between 3 and 7% of the £1000 as a deposit and don't pay anything over the 2 years. After the 2 years is up, you have a choice of either giving the bike back and getting your 3-7% back or let the company keep the deposit and you keep the bike.

I saw this scheme as a no brainer. You get a bike you want minus 40 odd % tax, and then if you want pay 25% back after a year. This is still a good discount, and you barely notice the money coming out as it comes from your Gross not NET.

[princeperch]

for both my brompton and my boardman carbon road bike (800 and a grand) I'm simply going to pay 70 quid per bike and enter into the extended contract for 5 years in July. they'll then be worth nowt and will then become mine.

[anonymous-user]

danrc said:

all that stuff

Very helpful! Yeah it does still seem like a good deal even if I have to pay the end fee myself. This extended 2 year thing though; I would only have to pay back a maximum of £70 (7%) in one lump and then absolutely nothing else for 2 years and the bike would be mine? That's instead of paying 25% ouright (£250)? Seems very odd.

I'm hoping JLR might pay the fee though as they are so large

On another note, surely if you give the bike back after a year you've just pissed away £600 or so quid? I know you've had use of it for a year but to give it back after spending all that, that seems like madness.

Edited by MSTRBKR on Wednesday 29th June 12:00

[stevieb]

Parrot of Doom said:

Can't you pay it back over a longer period? That way the bike is worth less, you pay less.

Yes, only if your employer will let you do this!

[Chrisgr31]

Doesnt the process at the end all depend on the scheme operated? Our scheme is with Halfords and it is less than clear what happens at the end, and there is no mention in the documentation of an extended term at the end. However that does appear to be the case on one of the other schemes.

[stevieb]

Chrisgr31 said:

Doesnt the process at the end all depend on the scheme operated? Our scheme is with Halfords and it is less than clear what happens at the end, and there is no mention in the documentation of an extended term at the end. However that does appear to be the case on one of the other schemes.

Halfords is the prefered outlet and a facilitator for the scheme. But the bike is purchased your employer and it is the employer that decides the terms of the c2w scheme. E.g length, transfer of ownership at end etc.

[Kermit power]

MSTRBKR said:

Damn, it looks like £1000 is the maximum allowed so I probably won't bother now.

Check that with JLR. The majority of schemes will tell you that the limit is £1k, but as has been pointed out by another poster, what they really mean is that you are limited to £1k unless your employer has a consumer credit licence, in which case the employer can decide to increase the amount.

I would be very surprised if JLR doesn't have a consumer credit licence?

[Rolls]

When i discussed the scheme with our guys who run it, I put it to them that i'd be better off buying one of last years bikes in the sale given we now had to pay 25% of the value of the bike at the end of the years "hire"... - To which they replied "yes, you are probably correct!!"

[Kermit power]

Rolls said:

When i discussed the scheme with our guys who run it, I put it to them that i'd be better off buying one of last years bikes in the sale given we now had to pay 25% of the value of the bike at the end of the years "hire"... - To which they replied "yes, you are probably correct!!"

You can still pay the additional "deposit" for an extended hire period. This is 3% for bikes under £500, and 7% for bikes over. It's the last payment you make, the company can't take the bike back off you, and at the end of the extended period it's yours, or you can hand it back and get your 3/7% back. The only thing you can't do is get rid of it before the end of that period.

It is much more worthwhile if you're a higher rate taxpayer though.