Bike to work scheme sucks

[bonerp]

I think this is a really poor scheme that does little to promote cycling - for those of us who are self employed at least...

I am on a flat rate vat scheme so cannot claim back the vat.

Corporation tax is deductable at 20% up to £1000 (net) - £166. However as its bought through the company, when I 'buy' it from the company, I need to pay a nominal % at the full cost of the bike....and on a £2k e bike that starts to knaw into the saving I made at the start!

If I own the bike from the start I can clam 20p per mile. If the company buys it, I cannot. So I may as well buy it myself and claim mileage!

You'd really have thought the government should reduce vat/zero vat on bikes and add an incentive that is consistent across all employment types. What a crock....

 

[trex]

I don't think you can claim mileage to go to work. If your employer gives you money to cover your cost then it should be declared as benefit in kind and subject to National Insurance.

 

[KirstinS]

The not so new now changes ruined this scheme in any event

Ride2work is even worse - what my employer uses - as you can only buy from Evans . Given their overinflated prices in the first place it just doesn't make any sense

 

[amigafan2003]

It's better if you're a higher rate tax payer ;-)

Digging out my payslips I was paying £28.19 a month for my £700 Trek, or £338.33 per year. At then end of 12 months I paid a "final" payment to cyclescheme of 7% of the value of the bike or £49, so that's a £312 saving, or 52% off the cost of the bike. This was 3 years ago - I don't know if the rules have changed since then.

Also, the way I saw it, it was an interest free loan over 12 months with no credit check.

 

[Ronnyuk]

It's great value even for a lower rate tax payer, I will explain

If you buy a bike at £1000 you will pay 83.33 a month for 12 months to your employer, as you get tax relief on the 83 quid you actually only pay £56.53 a month so your £1000 bike will cost you £678.36.

At the end of the 12 months you pay 7% and continue to hire the bike for the next 3 years, at the end of the 3yrs the bike is worth nothing so you get to keep the bike. After the first 12 months you start a new C2W Scheme and get a brand new bike, give the old one to your missus or kids etc.

Everyone's a winner

Just so everyone knows the HMRC no longer allows you to purchase the bike for 7% after the first year, if it's above £500 you have to pay 25% so £250.

 

[peerjay56]

There's a small saving on the NI contributions too, as the payments are taken beforehand.

 

[amigafan2003]

Just so everyone knows the HMRC no longer allows you to purchase the bike for 7% after the first year, if it's above £500 you have to pay 25% so £250.

Cyclescheme still do it for 7% (it's 3% if lower than £500 or 7% if higher that £1000.)

 

[Ronnyuk]

Cyclescheme still do it for 7% (it's 3% if lower than £500 or 7% if higher that £1000.)

Sorry not anymore, you pay 3% or 7% at the end of the 12 months but this is so you can hire the bike for a further period and is refundable at the end of your "hire" period, if you want to "purchase the bike you have to pay 25% after 12 months

 

[Clockwise]

It started out as a good idea but then companies got stuck into it and have been chipping away at the savings for employees to make savings/profits for the companies ever since, most now are pretty much just an interest free loan imo.

Some are even worse, a friend was offered a cycle scheme that had the condition they would have it serviced each 6 months at certain shops, £80+ a year on servicing on a bike that was only going to be £200 new, all it seemed to do was setup a service agreement in exchange for £10-20 off NI.

 

[amigafan2003]

Sorry not anymore, you pay 3% or 7% at the end of the 12 months but this is so you can hire the bike for a further period and is refundable at the end of your "hire" period, if you want to "purchase the bike you have to pay 25% after 12 months

Yeah - that's what I did - I paid the 7% "deposit" to enter an "extended hire period". At the end of three years you have the option of keeping the bike and cycle-scheme keep your 7% "deposit".

There is little difference between hiring it for three years and buying it outright though, so I don't know why anyone would pay the full 25% instead of going for the 7% "extended hire period" - the bike's still yours for all practical purposes. In fact, you can even leave your employer in the "extended period" (as I have) and suffer no penalty as the new contract is between you and cycle-scheme, not your employer.

 

[wissy]

we just pay over 12 months then pay the extra 'monthly' amount at the end of the period to own bike.