Actual cost of bike and equipment to employer C2W scheme?

[PJ134]

Hi everyone,
I'm going to ask my employer to join/offer a cycle to work scheme. But I know what the first question will be...What will it cost me?
As I understand it, once he has registered and I have picked the bike and equipment then he will get an invoice. Would the invoice be for the ticket price so then he has to claim back the vat and my HMRC employee discount? Or will the invoice be for the bike and equipment minus the vat and HMRC employee discount?
Also, are all cycle to work schemes the same?
If I send my employer an invite to join, which one would you recommend?
Thanks in advance.

 

[Woosh]

I strongly suggest your employer look at the commission before joining.
Green Commute Initiative takes 5% in commission while cyclescheme.co.uk and Halfords (the two biggest) take 15%.
If you apply for £1,000 voucher, the retailer gets £950 from GCI, £850 from Cyclescheme and Halfords.
Some universities now run their own schemes, they charge zero commission, the retailer gets all the £1,000.
Put yourself in place of the retailers. They will give you as much goods as what your voucher is worth to them.
Your employer does not have to join one of the schemes. They can do like universities do, pass on all the benefits to their employees. All they have to do is to buy the bikes, recover the VAT on the purchase and give the bikes to their employees. Then every month in the next 12 months, retain 6% of the value of the bike from your gross wages (before tax and national insurance, called salary sacrifice). How hard is that?

The cycle to work scheme with no £1000 limit

Cycle to work scheme with no £1000 limit, no exit fees. Save upto 47% on e-bikes and conventional bikes. Low commissions for bike shops.

greencommuteinitiative.uk

 

[PJ134]

Thanks, Woosh.
I didn't know that the commission charge varied for different scheme providers. What do the 15% schemes offer over the 5% schemes?
I also wasn't aware that my employer could apply by themselves outside of a scheme. I guess the paperwork is heavy going hence the service that scheme providers offer?
There are only 3 PAYE employees in our business so do you think it could be done by ourselves or via a scheme provider?
I still don't know the actual cost of the equipment to the employer. E.G, an online calculator suggests a package worth £1700 would cost me the employee £1275 after the HMRC calculation. Would the employer pay £1700 and claim it back or the £1275?
Cheers

 

[Woosh]

What do the 15% schemes offer over the 5% schemes?

nothing more.
It goes to show marketing muscles of some companies.

 

[Woosh]

I guess the paperwork is heavy going hence the service that scheme providers offer?

actually less. One sheet of paper setting out how much will be deducted from your monthly pay and for how long, signed by you that you accept the rental terms. That's it.
At the end of the year, the bike can be sold to you for 10% of its initial value.

 

[Woosh]

There are only 3 PAYE employees in our business so do you think it could be done by ourselves or via a scheme provider?

you can download a sample C2W contract from my website if you like.

https://wooshbikes.co.uk/2020/C2W_SAMPLE_SELF_ADMINISTERED_SCHEME-RAMBLA.pdf

 

[PJ134]

Thanks, Woosh.
I didn't know that the commission charge varied for different scheme providers. What do the 15% schemes offer over the 5% schemes?
I also wasn't aware that my employer could apply by themselves outside of a scheme. I guess the paperwork is heavy going hence the service that scheme providers offer?
There are only 3 PAYE employees in our business so do you think it could be done by ourselves or via a scheme provider?
I still don't know the actual cost of the equipment to the employer. E.G, an online calculator suggests a package worth £1700 would cost me the employee £1275 after the HMRC calculation. Would the employer pay £1700 and claim it back or the £1275?
Cheers

you can download a sample C2W contract from my website if you like.

https://wooshbikes.co.uk/2020/C2W_SAMPLE_SELF_ADMINISTERED_SCHEME-RAMBLA.pdf

Thanks.
Would my employer have to hold a credit license to offer a bike over 1K?

 

[Woosh]

Would my employer have to hold a credit license to offer a bike over 1K?

yes, in principle, any C2W over £1,000 will need authorisation from the FCA. That's why most companies limit the amount to £1,000 and leave the balance to the employees to sort out with the bike shop.

Under the OFT group licence, employers required separate authorisation for cycle orders over £1000. The specific exemption for cycle to work schemes under the FCA also only covers orders up to £1000. However, not-for-profit bodies are also specifically exempt from FCA regulation under PERG 2.3.2, regardless of the value of the cycle. Other employers may also be exempt under the 'business test' which is defined in PERG 2.3.3. FCA regulation is only required where employers are operating a scheme 'by way of business', a term which relies on various tests outlined in the perimeter guidance.

Unless employers apply for FCA regulation, cycle to work hire agreements should not include any reference to being regulated under the Consumer Credit Act. The inclusion of such a statement may expose employers to consumer protection claims as the document may be considered to be misleading.

https://en.wikipedia.org/wiki/Cycle_to_Work_scheme

I have removed this line from the sample agreement:

This Hire Agreement is regulated by the Consumer Credit Act 1974.

 

[PJ134]

Thanks, Woosh.
I didn't know that the commission charge varied for different scheme providers. What do the 15% schemes offer over the 5% schemes?
I also wasn't aware that my employer could apply by themselves outside of a scheme. I guess the paperwork is heavy going hence the service that scheme providers offer?
There are only 3 PAYE employees in our business so do you think it could be done by ourselves or via a scheme provider?
I still don't know the actual cost of the equipment to the employer. E.G, an online calculator suggests a package worth £1700 would cost me the employee £1275 after the HMRC calculation. Would the employer pay £1700 and claim it back or the £1275?
Cheers

you can download a sample C2W contract from my website if you like.

https://wooshbikes.co.uk/2020/C2W_SAMPLE_SELF_ADMINISTERED_SCHEME-RAMBLA.pdf

Thanks.
Would my employer have to hold a credit license to offer a bike over 1K?

yes, in principle, any C2W over £1,000 will need authorisation from the FCA. That's why most companies limit the amount to £1,000 and leave the balance to the employees to sort out with the bike shop.


https://en.wikipedia.org/wiki/Cycle_to_Work_scheme

I have removed this line from the sample agreement:

This Hire Agreement is regulated by the Consumer Credit Act 1974.

Thanks for your advice.

 

[Woosh]

I still don't know the actual cost of the equipment to the employer. E.G, an online calculator suggests a package worth £1700 would cost me the employee £1275 after the HMRC calculation. Would the employer pay £1700 and claim it back or the £1275?

most calculators are from the scheme providers, so they don't give you the best scenario that an employer can elect to use.
Essentially, when you use salary sacrifice, the employer don't pay national insurance contribution (13.8%) on the salary sacrifice, you don't pay your own national insurance (12%) and basic tax rate (20%) on it.
The total of savings is thus: 13.8% + 12% + 20% = 45.8%
If you pay higher rate on income tax, the saving will be even higher.

 

[Angelina Smith]

So how did it go? Did you employer clear payment for your e-bike? I've come around several discussions here but everybody was just asking. The thing is that I need to do two things. First is that I want to find a work as a courier in London. My frinds said that I will have no problem finding such job if I send my resume to open vacancies at Amazon or the like
https://uk.jooble.org/jobs-amazon-delivery-driver/London and don't get scared that I am not using the car but an e-bike instead. And second question is about the e-bike per se. What do you think, will it be legitimate to ask Amazon or any big company for this matter to reimburse the costs if I am hired, of course? Will it apply to the used bike?

 

[PJ134]

Hi Angelina
I put the proposal to my employer but he didn't commit to anything and he just avoids the subject now so I think that route for me is dead.
I'm afraid I don't know enough to offer an opinion on your second question. Perhaps someone else on this forum may be able to help?
I did take a test ride on an Oxygen bike https://www.oxygenbicycles.com/ as they are local to me and I can recommend them based upon that test ride. I look occasionally on second-hand sites for one but brand new is out of reach for me without a scheme.
Good luck.

 

[Angelina Smith]

Hi PJ134 and a happy Monday Yes, I hope so too that I will get the info about my second question. So far I am choosing what e-bike to buy but still haven't come to any decision. And you? Was your test drive successful?

 

[PJ134]

Yes, it was a good test. I did around 6 miles with a mixture of hills and flats and the extra push from the electric assist made the hills disappear. The bike felt very solid with a decent chainset and hydraulic brakes but without feeling too heavy. That was the only make of electric bike I tried so I can't compare them with another brand but they do get good comments from fellow forum users so I won't be looking for anything else.
I think a good insurance policy would be a wise move if you are going to use it to courier as I think it would be attractive to thieves.
I hope you find something that suits you.