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A year ago I used Cycle Scheme to help fund a new road bike. I 'borrowed' £1,000 from the scheme and invested an additional £1,500 of my own cash into the bike.
For the past 12 months I've paid back £83.33 per month effectively paying back the £1,000 borrowed. I've now reached the end of the agreement and have three options:
1, Pay £70 and hope the ownership is transferred to me in 36 months.
2, Pay £250 now and ownership is transferred to me now.
3, Hand it back to Cycle Scheme forfeiting my £1,500.

I appreciate I've saved on income tax and national insurance but am I right to feel slightly aggrieved at having to pay more money into a bike that I've effectively now fully paid for.

What are your thoughts? Were any other Cycle Scheme riders out there aware of this?

19 comments

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chivers67 [6 posts] 2 years ago
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I felt the same to a degree but having saved on Tax and also had the benefit of cycling thus saving money, one further payment is all that's necessary now? It's yours it's just that the only way round it for somekind of Tax "loop hole" is you're still leasing/borrowing it

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dave atkinson [6301 posts] 2 years ago
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you paid the £83.33 back before tax and NI though, right? so presumably you're well up on the deal even with the £70 market value payment? that's kind of the whole point.

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glynr36 [637 posts] 2 years ago
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It's what Dave said, you've paid tax on £1000 less over the allowance for the year.

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bigshape [167 posts] 2 years ago
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why do you have to pay £250 to own the bike now?
i thought the final payment at the end of cycle scheme was the tax on the final value?
i.e. 20% of £250... or have i got that wrong?

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glynr36 [637 posts] 2 years ago
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bigshape wrote:

why do you have to pay £250 to own the bike now?
i thought the final payment at the end of cycle scheme was the tax on the final value?
i.e. 20% of £250... or have i got that wrong?

Nope it's set on the value at the start.
They killed the scheme when they bought the fixed end prices.
I got lucky and had two bikes out of it where my employer took £10 as the final payment.

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bigshape [167 posts] 2 years ago
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that's nuts! so out of your £1k voucher you're paying £930 by the end of the year if you want to own the bike outright?!  35 why bother?
i'm looking in to doing the scheme at the moment, but if that's the case i can probably negotiate a better deal from the lbs and pay interest free!

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sergius [424 posts] 2 years ago
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A lot will depend on your employer. Mine just "extended the lease" but stopped taking any money - that was the end of it for me. I don't know if accounts had to do some trickery or not. This was a couple of years ago mind, I think they changed the rules since then.

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bigshape [167 posts] 2 years ago
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http://www.discovercyclingtowork.com/indepth/end/end-of-the-hire

see if you can convince your employer to give you the bike as a 'benefit in kind' in which case you only need to pay the tax on the final value.

your employer would then have to fill out a p11d form which will adjust your tax rate the following year, effectively paying off the tax on the £250 over the course of the year (£3.47 per month for a lower rate tax payer on a £1000 voucher)

that's what i'm hoping to do with the scheme at my place...

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the_jm [36 posts] 2 years ago
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I bought a bike on this years scheme, we were lucky enough that we could spend £2K. My employer extends the lease at the end of the payment for a further 5 years with zero payments. At the end of that period I will pay the fair market value for the bike and it will become mine. The HMRC say the FMV after 6 years will be 0% of the purchase price. It really depends on what your employers or whoever manages your scheme puts in place.

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Ratfink [144 posts] 2 years ago
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At my place you just pay £25 at the end of 18 months and it's yours.

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allezrider [92 posts] 2 years ago
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So glad my employer self administers the scheme - means I can effectively go in as a cash buyer get any dicount going and get it tax free on the reduced amount  4

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parksey [342 posts] 2 years ago
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Leeroy_Silk wrote:

I appreciate I've saved on income tax and national insurance but am I right to feel slightly aggrieved at having to pay more money into a bike that I've effectively now fully paid for.

In my opinion, no.

As others have stated, there are subtle differences between cycle to work schemes, but with Cyclescheme it should have been abundantly clear during the sign-up process that your end-of-hire options [on a £1k voucher] will be to either pay 7% to extend the lease or pay 25% to take outright ownership.

The former is the no-brainer for the majority, as cycle to work schemes are about long-term ownership, not a means to scratch the n+1 itch and then get rid after a year. In that respect you'll still get a net saving of about 25%, which is better than any deals at my LBS (short of a deal on a 2 year-old model in a 62cm frame size...).

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bigshape [167 posts] 2 years ago
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so can anyone recommend a scheme that allows the benefit in kind gifting of the bike to the employer after the fixed term?
i don't want to get tied into a bad scheme if i can help it...and do have some influence over the scheme we'll be using.
ideally i'd get them to administer a scheme in house, but i don't think they'll go for that.

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the_jm [36 posts] 2 years ago
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One of the large retailers offer a scheme where they take care of ownership at the end of the scheme. I believe it works like this: The retailer takes ownership of the bike at the end of the scheme and continue to 'hire' it to you FOC until it has a fair market value of £0 at which point ownership is transferred to you. This is the scheme my employers use.

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Leeroy_Silk [155 posts] 2 years ago
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bigshape wrote:

why do you have to pay £250 to own the bike now?
i thought the final payment at the end of cycle scheme was the tax on the final value?
i.e. 20% of £250... or have i got that wrong?

Option 2 was 25% of the market value. To cycle scheme the bike was £1,000 so market value at the end of 12 months was £250.

Option 1 was either 3% of the borrowed amount if less than £500 or 7% if more than.

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Leeroy_Silk [155 posts] 2 years ago
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I guess I entered into the scheme slightly blinded by the thought of a new bike that I intended to keep for a long time and saving some tax. I certainly didn't expect to give back some of my tax savings when all was done. I spoke with a friend who runs the scheme at his bike shop and heard of customers who every year use it to get a new bike and eBay off their old one.
Before entering into the scheme my employers didn't know too much about what happened after the scheme ended as no one had ever taken up the offer!
I can't say whether it's a good scheme as I've nothing to compare it against. I had planned on upgrading the groupset and still might but the thought of upgrading a bike that doesn't quite belong to me feels slightly odd. I know that at the end of the next 36 months the bike will be mine, it just unnerves me a little with the wording. At lot could happen in 36 months and some one somewhere might decide that they'll no longer give the bikes back.

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the_jm [36 posts] 2 years ago
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Whether it is a good scheme or not depends on a) how it is administered and b) how you intend to use it. In my case I get to spend up to £2000 on a new bike and/or safety equipment. I can take advantage of any discounts and price matching the retailer normally does.
In effect I pay 58% of the purchase price in 12 monthly installments. In return I have to keep the bike for six years and, in theory, use it mainly for commuting just like everybody else does  3 . For me it was a complete no-brainer.

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parksey [342 posts] 2 years ago
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^ this.

I do wish my employer both self-administered the scheme and allowed more than the normal £1k limit, (they have the credit licence to do so), but they run it very much by the book and the majority just want £300 or so to buy an everyday hybrid. To me, £2k would be enough to buy all the bike I'd realistically ever need!

Leeroy_Silk wrote:

I spoke with a friend who runs the scheme at his bike shop and heard of customers who every year use it to get a new bike and eBay off their old one.

I suspect this is quite true, but sadly also that a lot of those bikes are being sold without ownership actually having transferred to the seller... As a buyer, how would you know? Not like bikes have a V5 which evidences ownership!

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gr3g0ree [67 posts] 2 years ago
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Our 'HR department' came up with the lamest excuse not to sigh up to the scheme by cyclescheme or bike2work.
How does the in-house running of the scheme work? Any differences? They don't want to buy the bike themselves and then rent it to me.