Cycle to work scheme-puts 10% on the price

Kudoscycles

Official Trade Member
Apr 15, 2011
5,562
5,043
www.kudoscycles.com
Kudos Cycles is currently looking at the Cycle to Work scheme-such a scheme could only have been dreamed up by a civil servant-it is so complex that a trading company would only commit to the effort involved if it was getting top dollar for the cycle-the middlemen companies,example bike to work scheme.co.uk take some of the effort away but at the expense of a 10% commision paid by the retailer. Although this 10% is paid by the retailer,a sensible business would have allowed for the cost in his overheads,so effectively the cost ultimately has to be borne by the purchaser-try asking for a discount of 10% off any cycle to work retailer instead of using the scheme.
 

Kudoscycles

Official Trade Member
Apr 15, 2011
5,562
5,043
www.kudoscycles.com
I should add to the foregoing post that Kudos Cycles has not allowed this 10% margin reduction in its pricing structure and I am not prepared to increase our prices by 10% to cover the cost. I cannot speak directly for our dealers but I suspect they will say that the Kudos margins are too tight to encompass the scheme. Also I have spoken to some of the big employers in our area and they all have said that the costs of administering the scheme outweigh the benefits.
Dave
Kudos Cycles
 

tillson

Esteemed Pedelecer
May 29, 2008
5,145
3,002
I'm not 100% clear about what you are saying, but when I purchased my bike, the retailer passed the cost of the Cycle Scheme commission on to me by charging 10% above their advertised price. It was still a worthwhile saving, but since then the rules have been,"clarified" / changed with regard to the final buy back value of the bike. This has effectively wiped out any saving and the scheme is a waste of time.
 

JuicyBike

Trade Member
Jan 26, 2009
1,671
523
Derbyshire
The CTW Scheme has saved many people many hundreds of pounds, costs nothing for employers to administer and is funded by the retailer, who is encouraged to sell at RRP rather than discount. It has been extremely successful and it is a great pity that since the Torys came to power it has become less valuable a saving for purchasers.
National savings in transport and health costs have been enormous and the scheme should be encouraged by all keen to see more people on bikes.
 

Kudoscycles

Official Trade Member
Apr 15, 2011
5,562
5,043
www.kudoscycles.com
JuicyBike....I wholeheartedly agree with the motives of the scheme,which falls broadly in line with the Kudos ideal of getting more people on bikes by making electric biking more affordable,what I disagree with is the complexity of the scheme,such that retailers find it necessary to employ third party companies to sort out the paperwork. The catalyst for my posting was as a result of a customer who refused to accept a surcharge of 10% to cover the costs of these third party companies-I suppose I am using this forum to advertise the cost of using these companies,most purchasers are not aware of this costing to the retailer-however I notice that 'tillson' did accept the surcharge which seems unfair that such a surcharge should even exist-if the scheme were simpler most retailers would administer the sale themselves.
I notice in your posting that it 'encouraged to sell at RRP rather than discount' which is just my point that the scheme is so complex that it encourages anti competitive price points,out of the scheme bikes tend to be priced cheaper.
 

cwah

Esteemed Pedelecer
Jun 3, 2011
3,002
178
www.whatonlondon.co.uk
I was almost going to buy my bike under the cycle to work scheme. I did some research regarding this scheme, I called them and had few answers for us customers that may go for it without knowing what it worth.

1. The tax deduction "benefit":
They advertise saving up to 50%... But that's not going to be true for most of us. This need to be confirmation, but here is my deduction:
a. If your salary is under 35K/year (which is the majority of the population), you are not among the "high tax payer" people. Expect your "saving" to be around 30%.
b. If your salary is over 35K/year you may expect either 40% saving or maybe 50% saving if you're really on top. I haven't done research more research but I think that unless you earn 70K/year or more you won't benefit 50% "saving".

2. Now about the "saving":
a. Once you're under the Cycle to work scheme, the bike doesn't belong to you. Your company will rent the bike for you for a period (usually 12 months). During this period, you'll have to hire the bike and pay 50% to 70% of the bike price.
b. Once the 12 months lease is over (remember you'll have already paid 50% to 70% of the bike price), you'll have the option to purchase the bike for 25% of the bike initial price. Again, remember that the bike doesn't belong to you. Your company was renting the bike for you. If you want it, you can buy it.

3. Example of a £1000 bike purchased under the cycle to work scheme:
a. Suppose you want to purchase a £1000 bike
b. Suppose your salary is under 35K/year, which mean you'll have 30% "tax saving"
c. Like most of the people, you'll certainly want to own the bike after 1 year of use...

==> At the end of the year lease:
- You'll have paid 70% of the bike price. Which is £700.
- You'll have to pay 25% of the bike initial price to purchase it. Which is £250
- You'll have paid a total of £950. Which is £50 saving.


Remember 3 things from the scheme:
1. For most of the people, "saving" would be around 30%.
2. 30% to 50% saving is true only if you only want to hire the bike and leave the bike to your company at the end of the lease.
3. If you want to buy the bike at the end of the year, your real saving would be around 5%
 

BrianSmithers

Pedelecer
Apr 21, 2011
56
1
DA1
I was initially enthusiastic about the scheme. My employer (a local authority) was backing it, so I started touring the approved bikeshops (there were only eight on the list). Most stores didn't stock ebikes. Even my local Halfords didn't have them and the assistant told me I had to go across the river to Essex to a branch that did.
Of course, he said, they would be able to service the bike locally but no, nobody had actually done the training course.
Only one local shop on the list stocked ebikes (Giant) which were outside of my price range (and the CTW limit too).

Then I checked out the latest government tax information (EIM21667a - Particular benefits: bicycles: simplified approach to valuing cycles sold to employees after end of loan period) and discovered what "Tillson" and "Cwah" had reported earlier.

My employer is playing things rather carefully as they need to avoid what the tax folk would call a benefit (which would be taxable). In the past many employers allowed you to buy the bike after the year lease for a nominal amount - but they couldn't define in advance what that would be - or it would constitute a benefit.

They are now unable to say whether they would keep the scheme going for up to 5 years on a token lease (after year one) in order to get the final payment down to 2% (see the table on the tax man's page).

So in the end - given that it wasn't going to save me much at all, and I was so restricted where I could buy an ebike from, I gave up the idea of using the CTW scheme. It was a great idea totally screwed by red tape.

- Brian
 

fatts

Pedelecer
Dec 29, 2009
244
0
west wales
Good old goverment approach. If its quite happy going along hit it with a big stick, diesect it and add lots of useless nonsense to it.
 

andyh2

Esteemed Pedelecer
Jan 8, 2008
294
1
To be fair I don't think, in this instance, it's anything to do with the Tory gov. I think it was an HMRC process of clarifying the values of bikes after a certain time.

If you employer is VAT registered they'll be able to reclaim the VAT on purchase and won't have to charge as part of rentals which increases the tax savings. The employer will have to charge VAT when it sells the bike so after the year you still end up paying 25% of the retail price.

It's interesting that the charges for running the scheme are passed on to the retailer. The companies running the schemes could charge the employer directly. That's what happens with childcare vouchers. Employers don't mind paying as a) it's normally only 2.5% - 5% and b) they make a saving on reduced employers NI as salary is lower.

I'm not sure why it costs 2 - 4 times as much to administer cycle to work as childcare vouchers.

It would be interesting to know how much additional commuting by bike has occurred as a result of scheme. As opposed to how many cyclists have used it as a way to buy a better bike.
 

alexk-il

Pedelecer
Apr 24, 2011
61
0
Northern Ireland
I was given a choice by the dealer - either to get the bike with something like a 30% discount or to pay the full price with the cycle to work scheme. It was no brainer to me.
 

z0mb13e

Esteemed Pedelecer
Jul 28, 2009
578
3
Dorset
I raised the scheme with my employer when I was first looking at getting an ebike. They didn't like the idea that they would have to stump up the cash initially even though they would get the VAT back and a tax free contribution from my salary. From what I understood of the scheme, that tax free salary contribution was where the savings came from - money that normally would have been swallowed up in tax on my monthly salary would be paid to the ctws before tax.

I can only imaging the middle men operating the scheme are the ones stumping up the cash to buy the bike initially and hence the 10% operating cost.

Either way the scheme was off limits for me because my employer didn't want to pay the up front costs and because of the bikes I was interested in, only one was available on the scheme.

I also wasn't happy with the idea that I would be paying the lions share for a bike I didn't own and which my employer could do with as they wished at the end of the year. At the time, from my understanding, there was no guaranteed option for the employee to purchase the bike, that was entirely at the discretion of the employer. Having worked for some fickle employers in the past, this just didn't sit well with me...
 

Bob_about

Pedelecer
Nov 17, 2009
113
1
Warks/Glos Border
I was almost going to buy my bike under the cycle to work scheme. I did some research regarding this scheme..........

............

3. Example of a £1000 bike purchased under the cycle to work scheme:
a. Suppose you want to purchase a £1000 bike
b. Suppose your salary is under 35K/year, which mean you'll have 30% "tax saving"
c. Like most of the people, you'll certainly want to own the bike after 1 year of use...

==> At the end of the year lease:
- You'll have paid 70% of the bike price. Which is £700.
- You'll have to pay 25% of the bike initial price to purchase it. Which is £250
- You'll have paid a total of £950. Which is £50 saving.


Remember 3 things from the scheme:
1. For most of the people, "saving" would be around 30%.
2. 30% to 50% saving is true only if you only want to hire the bike and leave the bike to your company at the end of the lease.
3. If you want to buy the bike at the end of the year, your real saving would be around 5%
Hi

Well put summary cwah, and reflects pretty much the situation I found myself in.

Add to the above that the retailer needed to pass on the 10% fee made by cyclescheme.co.uk to myself and that £50 "saving" in reality became a £50 cost.

The bike I purchased through the scheme was actually worth £1900, I put £1000 through the scheme and paid for the batteries separately, so even without the admin fee element charged by cyclescheme.co.uk the potential £50 "saving" was closer to 2.6%

In its current form I do not believe the scheme is of any merit to support the purchase of an ebike. I would recommend a search of credit cards offering 0% interest on purchases over 12 months or more, then negotiate a good deal with your retailer then put the purchase on that and pay it back over 12 months!

The intent of the cycle to work scheme are good, but the reality is a nonsense imho

All the best

Bob_about
 

banbury frank

Banned
Jan 13, 2011
1,565
5
Hi


We did a few bikes through the NHS Scheme run by a independent company They paid us less
15% then they Banned topping up the price over £1,000 Because they said who owned what Part off the Bike
So no more Cycle to work Scheme

If you want Go to Evans Cycles buy the bike on the CWS they deliver to Banbury


Then you pay us to convert it

Frank
 

amigafan2003

Esteemed Pedelecer
Jul 12, 2011
1,389
139
I asked for a discount on a £700rrp Trex FX 7.5 and got it for £600.

That was through my company (Hewlett Packard) using cyclescheme.co.uk

Oh, and cycle sheme ask for a nominal "7% of initial purchase price" to transfer ownership at the end of the rental period (I've gone for 12 months).

Total payable will be £422. Not bad for a £700rrp bike.

Oh, and I'm converting it with aTongxin + Lyen + 36v15ah battery - I don't care if I don't actually own it - let them try and prise it from my fingers :)
 
Last edited:

cwah

Esteemed Pedelecer
Jun 3, 2011
3,002
178
www.whatonlondon.co.uk
Last edited:

amigafan2003

Esteemed Pedelecer
Jul 12, 2011
1,389
139
CWAH - There are guidelines and there are guidelines :)

If you don't ask, you don't get.

EDIT:-

BTW, not talking about my current bike, I've only just entered into a 12 month agreement for that one but my wife finished her 12 month agreement last month - £600 GT and she paid the 7% on that one.

They said they would put it through the books as a 36 month extension but said as far as they were concerned the bike is ours and we'd hear nothing more from them. I confirmed this a week ago by calling them and asking how long we had left on the lease - they said there was nothing outstanding and it ended a month ago :)

quote from the cyclesheme.co.uk faqs:-

The most attractive option for employees will be to pay a small, refundable deposit (3% or 7% of the equipment value*) and continue to use the bicycle for an extended period of up to 36 months.

At the end of this period, if the employee does not wish to keep the bicycle, then Cyclescheme will refund the deposit in full. Alternatively, Cyclescheme may at its discretion, offer ownership of the bicycle to the employee at this point, and no further action or payment will be required if they wish to keep the bicycle.
 
Last edited:

Bob_about

Pedelecer
Nov 17, 2009
113
1
Warks/Glos Border
Amigafan, how did you manage to pay only 7% nominal fee on a 12 months lease?

According to HM page:

EIM21667a - Particular benefits: bicycles: simplified approach to valuing cycles sold to employees after end of loan period
=> 7% fee is available only if you lease the bike for 4 years.
CWAH, this is exactly where I found myself

Cyclescheme.co.uk faqs as quoted by amigafan2003 make it clear the offer to transfer ownership is at their discretion and having had them change their arrangements partway through my 12 month agreement with them I had no confidence they would be saying the same thing 36 months down the line.

The HMRC guidelines are now very clear, very inflexible, and I would imagine any organisation openly flouting them or working around them in any way will be clamped down on. Personally I would not take the risk of hoping it will all be OK in 12 months time.

Making changes to a bike you do not own is an interesting idea - the only way I was able to convince my employer my £1000 bike and £900 batteries could be separated out and the bike put through the scheme was that the batteries could be removed again at any point and the £1k bike was still a functioning cycle - I guess so long as a kit could be un-installed again that would be no different?

I think its sad that a good idea has become an unworkable nonsense unless people are prepared to bend the guidelines and effectively defraud the taxman - there must be better ways?

All the best

Bob_about
 

amigafan2003

Esteemed Pedelecer
Jul 12, 2011
1,389
139
If they decide they want the bike back after 12 months they'll have to prise it out of my cold dead fingers :)
 

Bob_about

Pedelecer
Nov 17, 2009
113
1
Warks/Glos Border
If they decide they want the bike back after 12 months they'll have to prise it out of my cold dead fingers :)
I believe HMRC are quite happy to pursue the deceased`s estate to recover what they believe is owed!!