Query re purchasing a bike of value >£1000 limit on Cycle to Work scheme

Icicle19

Finding my (electric) wheels
May 11, 2009
6
0
Hi, I'm a newbie to this forum and have been 'lurking' and learning a great deal as I consider which e-bike route to embark upon.

My employer is going to offer c2w via Cyclescheme, and there is a £1000 limit on the value of the bike.

Useful info here - http://www.transport.ed.ac.uk/BicyclesPlus/BicyclesPlus_faqs.pdf - question 2, suggests that it's not possible to exceed the £1000 limit by paying the difference to the supplier, as this results in shared ownership of the bike.

One supplier I've been considering is Cytronex, but all of their bikes comfortably exceed the £1000 mark, yet other threads I've read do discuss (or at least hint at) getting a Cytronex on a c2w scheme.

If it is possible to exceed the £1000 limit, can anyone tell me how, please? Many thanks.
 
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Mussels

Esteemed Pedelecer
Jun 17, 2008
3,207
8
Crowborough
My employer is going to offer c2w via Cyclescheme, and there is a £1000 limit on the value of the bike.
The £1000 limit is probably set by Cyclescheme, it isn't a hard and fast ruling by the government. Strangely the Cyclescheme website doesn't mention it and their savings calculator returns a saving for the whole £1700 I put in there. :confused:

Also I saw this in the small print, after a year you have to pay an undisclosed sum to buy the bike off them - that's fishy.
**Please note :A Fair Market Value payment is payable upon cessation of the agreement or at the end of the lease period
 

tillson

Esteemed Pedelecer
May 29, 2008
5,145
3,003
Hello Icicle19 and welcome to the forum.

It would appear from the link that you posted that it is not possible to exceed £1000 on the value of the bike.

That must be a feature of Cycle to Work Scheme. My employer used Cycle Scheme and that does allow you to contribute towards a higher value bike, but that does not help you of course.

Would it be possible to talk to the bike supplier and ask them to sell you the bike for £1000 and on the proviso that you buy something else like a tyre leaver for the differential. I'm not an MP, honest.
 

Howard

Pedelecer
Jul 8, 2008
73
0
Hi
I bought my Wisper 905se on the Cycle to Work scheme, which was about £1200. There is nothing explicit on Tax free bikes for work through the Government's Green Transport Initiative - Cyclescheme, provider of Cycle to Work schemes for UK employers that says you can't pay the difference, but it looks like you have different rules... In my case, I paid a deposit of £200 to the bike shop, and they gave me a written quote of £1000 for the bike. This quote was then used to purchase the bike through the cycle to work scheme. I'm sure that if you find a bike you like and talk to the bike shop you'll be able to work something out, like buying the battery or other components separately (assuming you're talking about an ebike?), and then the bike shop could simply give you a written quote for £1000. Just remember which bits are solely owned by you and which are jointly owned - not that it really matters of course ;)
Hope you are able to sort it out anyway - all the best,
Howard
 

the_killjoy

Esteemed Pedelecer
May 26, 2008
822
226
Certainly my scheme last year allowed me to purchase a bike at over the £1000 mark with me paying the excess.

I have just had my 'final payoff statement' which permits me to buy the bike @3% (£30), by law they cannot specify the final value at the start of the contract as it would then become a hire purchase agreement.
 

Mussels

Esteemed Pedelecer
Jun 17, 2008
3,207
8
Crowborough
Certainly my scheme last year allowed me to purchase a bike at over the £1000 mark with me paying the excess.

I have just had my 'final payoff statement' which permits me to buy the bike @3% (£30), by law they cannot specify the final value at the start of the contract as it would then become a hire purchase agreement.
The government scheme was meant to be an HP system and not for leasing bikes, there was nothing in the paperwork to suggest otherwise. Cyclescheme seem to be adding this for no reason.
 

stokepa31_mk2

Esteemed Pedelecer
May 7, 2008
381
0
I purchased a Ezee torq through the scheme from 50 cycles. the rouse used was that they sold me the bike without the battery through the scheme for £1000 and I purchased the battery separately to make up the balance of the complete bike. Our scheme was run through halfords and they were happy with this arrangement.
 

Patrick

Esteemed Pedelecer
Feb 9, 2009
303
1
My employer is going to offer c2w via Cyclescheme, and there is a £1000 limit on the value of the bike.

...

One supplier I've been considering is Cytronex, but all of their bikes comfortably exceed the £1000 mark, yet other threads I've read do discuss (or at least hint at) getting a Cytronex on a c2w scheme.
The £1000 pound limit is becuase employers need a Consumer Credit Licence to set up the agreement but as long as it's kept below £1000 pounds it's automatically covered by a group licence set up by the OFT. Your employer would need to be apply for their own individual licence if they wanted to let you get bikes over £1000.

Department for Transport - Cycle to Work Scheme implementation guidance


CycleScheme act as middle-men between employers and supliers, they take a 10% kickback on any bikes that are bought through them and last time I contactacted Cytronex they were unable to deal with CycleSheme because of this.

So if you can convince your employers to apply for a Consumer Credit Licence, and to deal directly with Cytronex then you would be able to get any of the Cytronex range through the CycleToWork scheme. (How friendly is your finance department? :D )

One other option is to wait for the Ctronex kit to come out, then you can get an unassisted bike through cycletowork and buy the kit yourself.
 
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Patrick

Esteemed Pedelecer
Feb 9, 2009
303
1
The government scheme was meant to be an HP system and not for leasing bikes, there was nothing in the paperwork to suggest otherwise. Cyclescheme seem to be adding this for no reason.
No, the scheme is explicily not a HP system. An employer who agreed a final purchace price in advance could end up commiting a crimal offence by offering HP without a licence.

Here's the relevant section of the guidelines if you're interested.

=======================
9.3 Not Hire Purchase - dealing with what happens to the cycles and cyclists' safety equipment at the end of the hire period

Under a salary sacrifice scheme it is open to employers to sell ex-rental equipment. It is recognised that employers will often wish to do this, because it makes the scheme more attractive to employees. However, in order to obtain the benefit of the tax exemption the employers must not suggest that either the employee or any other person will later have the option to buy the equipment they have hired. Moreover, if the employer states that the employee will or may have this option, then the agreement will fall within the definition of hire purchase in section 189 of the CCA and may not attract the tax benefit. In addition, these agreements will fall outside the scope of the group licence and without the cover of a credit licence the employer may commit a criminal offence. The employer may at a later date exercise a discretion to sell to the employee.

We therefore advise employers that they can indicate in accompanying literature that ex-rental equipment may be sold for a fair market price, but they should make it clear that they cannot commit themselves to doing so, either to the hirer or to his nominee. Any subsequent sale must be pursuant to a separate agreement, entered into after the conclusion of the hire.

Ultimately only a court can decide whether the agreement is hire or hire purchase.
===========================================
Department for Transport - Cycle to Work Scheme implementation guidance
 

Mussels

Esteemed Pedelecer
Jun 17, 2008
3,207
8
Crowborough
No, the scheme is explicily not a HP system. An employer who agreed a final purchace price in advance could end up commiting a crimal offence by offering HP without a licence.

Here's the relevant section of the guidelines if you're interested.
Thanks, I missed that part. Doesn't make much sense to me but I guess that's why it's impossible to do without the company's agreement.
 

Patrick

Esteemed Pedelecer
Feb 9, 2009
303
1
Thanks, I missed that part. Doesn't make much sense to me but I guess that's why it's impossible to do without the company's agreement.
It quite straight forward, you agree to take a pay cut (note: the money is not deducted from your pay, you simply agree to accept a lower rate for a while) in return for the loan of a bike from your employer. Your employer buys a bike and lends it to you as agreed, at the end of the loan period your employer is free to do what they like with their bike, they can even sell it to you at knocked down price if they want to. What could be easier? :p
 

Icicle19

Finding my (electric) wheels
May 11, 2009
6
0
Thank you all, for your replies. I phoned Cyclescheme this morning seeking clariifcation (should have done that before I guess..) and they confirmed that £1000 was the limit. Unfortunately it looks like a Cytronex will be beyond me - how I wish I'd gone for it last year when they were doing the Trek 7.3 FX for £995 and I think maybe dealing with Cyclescheme (?).

I guess the way to go now is the suggestion of an unassisted bike via c2w, and then purchase the Cytronex kit when they finally come to market, though the extra cost of doing it this way really hurts! I imagine the cytronex kit cost will be comparable to the Nano motor cost from Electric Wheel Company (Nano | The Electric Wheel Company) ie approx £650.

AFAIK EWC and Cytronex are using the same motor (Nano/Tongxing), but I guess there will be differences somewhere between the two kits.
 

stokepa31_mk2

Esteemed Pedelecer
May 7, 2008
381
0
Thank you all, for your replies. I phoned Cyclescheme this morning seeking clariifcation (should have done that before I guess..) and they confirmed that £1000 was the limit. Unfortunately it looks like a Cytronex will be beyond me - how I wish I'd gone for it last year when they were doing the Trek 7.3 FX for £995 and I think maybe dealing with Cyclescheme (?).

I guess the way to go now is the suggestion of an unassisted bike via c2w, and then purchase the Cytronex kit when they finally come to market, though the extra cost of doing it this way really hurts! I imagine the cytronex kit cost will be comparable to the Nano motor cost from Electric Wheel Company (Nano | The Electric Wheel Company) ie approx £650.

AFAIK EWC and Cytronex are using the same motor (Nano/Tongxing), but I guess there will be differences somewhere between the two kits.
did you see about purchasing the battery seperately??
 

Icicle19

Finding my (electric) wheels
May 11, 2009
6
0
did you see about purchasing the battery seperately??
Well, no, as my favoured ebike would probably be a Cytronex, but I understand Cytronex won't deal with Cyclescheme, and for c2w I'm restricted to buying from a dealer in the Cyclescheme network.

FWIW I did ask the Dept of Transport wrt buying an electric motor kit via c2w scheme, as I actually already have a commuting bike that could be converted. This would be more environmentally friendly, save resources, cost etc, but they responded that no, this isn't possible, you have to purchase a complete bike to participate in a c2w scheme.

Ho hum, this is not as easy as I'd hoped it might be !
 

Caph

Esteemed Pedelecer
Feb 29, 2008
440
11
Nottingham, UK
I've said it before and I'll say it again. The cycle to work scheme is a half-assed bodge job by the government which leaves us out on a limb. I appreciate that many have used it without hassles but that still doesn't mean it's right.

As long as you realise that you have absolutely no rights to the bike even after you've payed the full cost (minus tax) then you pay your money and takes your chances. And even if your employer does allow you to buy it after you have payed its cost, then they _should_ sell it to you for fair market value. You are probably relying on them breaking this guideline and selling it to you at a much lower price of 5% of cost (this figure has been made up by some resellers of the scheme and is NOT what is stated in the government guidance).

My final word of advice, make sure you are very careful when you insure the bike, or even better get your company to insure it. If you insure it then you MUST make sure your insurer understands that you are insuring a bike that you do not own and is owned by your company.
 

JohnInStockie

Esteemed Pedelecer
Nov 10, 2006
1,048
1
Stockport, SK7
... And even if your employer does allow you to buy it after you have payed its cost, then they _should_ sell it to you for fair market value. You are probably relying on them breaking this guideline and selling it to you at a much lower price of 5% of cost (this figure has been made up by some resellers of the scheme and is NOT what is stated in the government guidance).
Actually Caph its on the DfT's guidelines, when the scheme was launched. :)

If anyones interested, I bought my Pro Connect on this scheme.

Here the chain of events...
At the time the Pro Connect was £1495, but as Cyclescheme takes 10% from the dealer, 50C said that I would have to add this commision onto the price of the bike which I think is actually fair when you think that CycleScheme are themselves only cashing in on the Cycle2Work legistlation in the ignorance of employers to how easy this scheme is to actually run!!!

This then priced the bike at £1595, so I purchased it at that price, with the promise agreed at the time (and written on the order form) that the £1000 would be re-imbursed to me.

I received the voucher from Cyclescheme a couple of weeks later, and 4 days after putting it in the post to 50C, received a cheque for my £1000.

So what have I paid for my Pro Connect?

I paid £595 above the scheme.
I pay £50 a month net out of my salary for 12 months, and the final payment is 5% (£50 already agreed)

So in total, £595 + £600 + 50 = £1245, a saving of £250 on the bike in total.

I have absolutly no fear of this scheme, as I know a couple of other people at work who have gone through the process completely, with no issues at all.

I am already contemplating my next purchase, its a choice between a folder, and normal tourer and an off-road ebike.

John
 

Caph

Esteemed Pedelecer
Feb 29, 2008
440
11
Nottingham, UK
Actually Caph its on the DfT's guidelines, when the scheme was launched. :)
John
Department for Transport - Cycle to Work Scheme implementation guidance

8) Can the employee keep the cycle at the end of the loan period?
There should be no automatic entitlement for the employee to take ownership of the cycle and cyclists' safety equipment at the end of the loan period. If the loan agreement (technically a hire agreement under the Consumer Credit Act 1974 (CCA)) allows for ownership of the cycle and cyclists' safety equipment to pass to the employee upon the exercise of an option, the doing of any other specified act by either party to the agreement, or the happening of any other specified event, the resulting agreement is likely to be hire purchase in which case the tax exemption available for a loaned cycle may not be available.

However, at the end of the loan period, the employer may choose to give the employee the option to purchase the equipment. Typically this would be offered at substantially less than the original value of the equipment, but to prevent a taxable benefit in kind arising as a result of the transfer of ownership the employee must pay the employer the fair market value of the equipment. No tax relief is available to the employee for the purchase so, where the price is recovered from salary, it must be deducted from their net salary. VAT will also be payable on the purchase price by the employee on the supply by the leasing company or the employer as owner of the equipment.

Alternatively, the employer may wish to allow their employees to continue to use the cycles and cyclists' safety equipment you have supplied after the initial loan period has ended, without transferring ownership. As long as the employee continues to meet the conditions of the tax exemption (see section 4 above) no tax charge will arise.

For fuller guidance on transfer of ownership, you may wish to refer to the HMRC website HM Revenue & Customs: Home Page.
 

JohnInStockie

Esteemed Pedelecer
Nov 10, 2006
1,048
1
Stockport, SK7
Youre correct Caph, its not on the Dft, its on BikeforAll (which was originally initiated by the Dft I understand). On there it says...

This ‘fair market price’ is usually five percent of the original package price. So, after a 18 month ‘loan’ for a bike package costing £1000, the employee takes full ownership for just fifty quid. This is as yet untested by HMRC.

Thats is the text I read over a year ago.

John
 

Caph

Esteemed Pedelecer
Feb 29, 2008
440
11
Nottingham, UK
John, I think you're experiences of the scheme are just as important and probably more important than then actual government text because from what I've read your experience is typical of the spirit of the agreement.

I'm not trying to put anyone off the scheme, I'm just trying to make sure everyone knows the full facts before they enter in to it.

It just annoys me that the government guidance text doesn't match the spirit of the agreement (another example in that same paragraph is where it states that the company is well within their rights to keep the bike after you've paid for it). Plus I'm probably an overcautious person by nature and generally if things can go wrong for me they do. I don't buy lottery tickets, put it that way. Let's not forget that if you get made redundant after paying for a substantial part of the bike, it could leave you in a very awkward position.
 

Patrick

Esteemed Pedelecer
Feb 9, 2009
303
1
John, I think you're experiences of the scheme are just as important and probably more important than then actual government text because from what I've read your experience is typical of the spirit of the agreement.

I'm not trying to put anyone off the scheme, I'm just trying to make sure everyone knows the full facts before they enter in to it.
I'm getting my Powabyke X6 through the scheme, and I considered the details of the scheme carefully. It does involve putting more trust in my employer than I would normally consider to be good practice, but on the other hand if I thought my employers might stiff me on a agreement like this then I'd be looking for a new job.

If the scheme is right for you then it's a good deal, equivalent to getting an interest free loan to buy a discounted bike. But the details of CycleToWork do limit how useful it is, and if your employer insists on using someone like CycleScheme then it limits it further. It's essential to make sure you understand it before you commit yourself.