After some input from the LCB knowledge bank...
Anyone used the Cycle-To-Work scheme with their employer to purchase a pushbike?
If so, what can you tell me about it - from employer and amployee perspectives?
(feel free to U2U me if you'd prefer)
Thanks,
Nick
I didn't use it, but I had several friends who did.
What do you want to know?
Thinking about using it.
Company's not done it, but open to the idea.
Wanted to get some feedback from people who've used it first.
There isn't really a lot to feedback I don't think, it is what it says on the tin. However it's an annual thing so try to confirm exactly what happens after the first 12 months, who owns the bike when, when you can get another etc. Different companies handle it differently.
Noted and well highlighted!
Both company (employer) and myself (employee) are keen to go into this with the 12 month outcome (cycle ownership) agreed, before we start it.
As it happens the company has no use (or interest) in owning a cycle.
Yes, that's definitely the case my friends found too - definitely seemed to be the case that the company suggested the bike depreciated a
lot....
The bikeradar article is useful with worked examples
https://www.bikeradar.com/advice/buyers-guides/c
ycle-to-work-scheme-everything-you-need-to-know/
Thanks for the comment and Bike Radar link.
I looked at it a few years ago, and I think it would suit some people well. The thing that put me off was that it needed to be a brand new bike from
a supplier participating in the scheme, and I'm the kind of person that prefers to buy a 'nearly new' £2k bike for £1k second hand, and
then I'm less precious about it.
So if you're someone that would have bought a brand new bike at high street prices anyway, and your employer is willing to play ball and do the
admin, then it seems like a good idea to me.
quote:
Originally posted by garyo
I looked at it a few years ago, and I think it would suit some people well. The thing that put me off was that it needed to be a brand new bike from a supplier participating in the scheme, and I'm the kind of person that prefers to buy a 'nearly new' £2k bike for £1k second hand, and then I'm less precious about it.
garyo
Fair point - I've normally built my own bikes or bought 2nd hand.
The scheme has it's slaloms to negotiate for sure.
coyoteboy
Again fair point
I'm considered the "bike guy" at my work. The buy by pick and choose components from a range of suppliers isn't an option with the
scheme.
Have to choese the bike with some care for sure!
I did it years ago.
Didn't go through "Cycle Scheme" companies, just told my old man I was doing the cycle to work scheme. The company bought the bike (for
a grand) and claimed back the vat. Got accountant to account for my salary sacrifice and basically got the bike for about £600.
My understanding of the current scheme is:
1. Employer buys a bike from a participating retailer.
2. Employee sacifices £xxx monthly salary, before Income Tax & National Insurance deductions, over 12 months.
3. After 12 months employer still owns the bike.
4. There needs to be an agreement in place between employer/employee over what happens then. Typically seems to be employee buys the bike from
employer at the 1 year old market value (or an agreed value).
Is this understanding correct?
Any way it can be done differently (e.g. employer and employee agree 12 monthly salary sacrifice payments that see the bike paid for in full)?
^^^ this is mine and my employer's preference, so at the end of the 12 month period it's all finished - no more money to be paid.
Your input is welcome people.
[Edited on 20/7/23 by nick205]
I've never used the cycle-to-work scheme.
I own three bikes: Roadie, MTB and Street Trials type of bike.
Friends at work have used the scheme and they HAVE bought components to build a bike or just to improve their current bike.
A friend bought some Hope Wheels and a set of Fox forks as well as a Helmet and Gloves.
So check carefully - I think it is possible 
JAG
Useful info - thanks - I'll investigate further!
I think you've summarised it well Nick. So the benefit is marginal if you're a 20% tax payer if I understand correctly:
e.g. you buy a 1k bike. This is pre tax (20%) and emplyoees national insurance (10%), so only costs you £700 of salary sacrifice to rent from your
employer for a year.
The residual value after 1 year is 20% or £200, which you pay. So you have a £1k bike that you paid £900 for.
The employer also saves their 10% of employers NI contributions, which is nice for them but probably doesn't even get close to paying for the
admin headache, especially if only one person is participating in the scheme in your company.
For a higher rate tax payer the savings are far more compelling.
The way it gets very cost effective is if you can agree to extend the ‘loan’ period for a long time for a nominal fee, e.g. another 5 years after the
initial 1 year. At this point the value of the bike has depreciated hugely and the final payment to transfer ownership becomes tiny.
If you sacrifice over 12 months and then have to buy the bike the ‘one year old’ bike cost might wipe out any saving from the salary sacrifice.
If you’re a 40% tax payer then it’s a great scheme. If you’re a 20% tax payer it can end up more like a way to get 0% finance but with the
disadvantage that a retailer will probably charge you RRP rather than enable you to negotiate a reasonable discount….
Depending on who runs the scheme I understand some C2W scheme providers squeeze the retailer for 10% of the transaction value.
Ive done it once. i was a bit nervous about the paperwork that mention a purchase at the end i the year, but my employers (university) never even mentioned it, and nothing extra to pay.
nope, but I did just buy a Carrera Crossfuse E-bike from Halfords and would highly recommend it.
quote:
Originally posted by jps
The way it gets very cost effective is if you can agree to extend the ‘loan’ period for a long time for a nominal fee, e.g. another 5 years after the initial 1 year. At this point the value of the bike has depreciated hugely and the final payment to transfer ownership becomes tiny.
If you sacrifice over 12 months and then have to buy the bike the ‘one year old’ bike cost might wipe out any saving from the salary sacrifice.
In my case the employer will either extend the "loan" period for another 12 months OR write off the bike after the first 12 months with nothing left to pay. As with most employers, the bike would be of little/no interest of use to them to have to store and have no rider.
quote:
Originally posted by coyoteboy
quote:
Originally posted by jps
The way it gets very cost effective is if you can agree to extend the ‘loan’ period for a long time for a nominal fee, e.g. another 5 years after the initial 1 year. At this point the value of the bike has depreciated hugely and the final payment to transfer ownership becomes tiny.
If you sacrifice over 12 months and then have to buy the bike the ‘one year old’ bike cost might wipe out any saving from the salary sacrifice.
Never met an employer who didn't write off the value after 1 year.