[Closed] Any cons to Cyclescheme?

Employer has to spend the money upfront and has to administer (cost) the scheme internally.

If an employee leaves, whatever is owed is deducted at Net rather than Gross (our scheme anyway).

You can only use bike companies & shops that work with the schemes (and many don't due to the cost).

I'm a higher rate tax payer and for my recent gravel bike purchase whether I went cycle scheme or bought myself the cost worked out near-enough the same per month for the spec I wanted (carbon & high-end groupset) as I could take advantage of the low/non rate finance.

It's tax/NI free, so you save about a quarter to nearly half, the limiting factors just now are that some schemes are not as good as others for LBS's, so they are loathe to dealing at present, as it's losing a percentage that they don't really need to just now, my work uses the Halfords scheme, which is by all accounts the worst, so either they just won't really deal with Halfords, or they add on the percentage, so you lose most of the benefit!

Best thing is look into what scheme you have, what you are after then calculate the savings, also work out how long the scheme lasts, as folk think it's just 12 months for payments, but it's actually the entire loan term, so if your company loan it out for another 3 years after the initial 12 months, you will have it for 4 years, and some companies also require a last payment, usually 7% or the likes.

If an employee leaves, whatever is owed is deducted at Net rather than Gross (our scheme anyway).

Not sure if your parenthesis refers to netvor gross. If gross then your employer is breaking the law. It always needs to be net.

I’m a higher rate tax payer and for my recent gravel bike purchase whether I went cycle scheme or bought myself the cost worked out near-enough the same per month

Intrigued by this, or are you just saying that the payback duration of the self bought was much longer?
If so, that seems like a pretty pointless comparison.

I've just this month came to the end of my cyclescheme. I had the option of giving the bike back at my cost for the return, buying the bike for about £750, or agree to keep it for 4 years.

I obviously saved a bit but it wasn't a great deal.

Is anyone aware of any cons for both employers and employees of using Cyclescheme over a scheme that is managed directly by an employer?

There's the problem of scheme limits, if your employer is not FCA regulated then you'll be limited to whatever todays current blanket limit is (£1000 still?). If they are a credit broker/licensed in someway to offer credit then that problem goes away. The other downside for the employer is they have to do the paper work themselves. Aside those two points a scheme ultimately offers nothing that the direct way doesn't. Its literally just the paperwork. Schemes can organise finance on the bikes but the E-NIC savings on the sacrifice more than pay for the cost of the capital deployed to purchase the bike so again no benefit to then pay interest that erases that benefit to the company, although I have heard of companies passing on the finance fees to their staff (while pocketing the Employer's NIC savings of course).

My limit was up to £4k or £5k. The bike I got was £3200

Sorry should have been clearer:

There’s the problem of scheme limits, if your employer is not FCA regulated then you’ll be limited to whatever todays current blanket limit is (£1000 still?).

Thats if direct with the employer, that isn't an issue with an intermediary or if the employer is a credit broker or similar.

Also a benefit of being direct between your employer and the seller of the bike is you can negotiate on price/not face additional charges.

I've used it quite a bit and it was always a great way to buy bikes or bike frames etc as long as you found a retailer who it also suited. Its all changed for us over last 12 months, limit now £3K [was £1k] and my employer has teamed up with a provider CycleSolutions. There is also now no pretence that you have to buy a whole bike. Anything bike related is fair game. In general prices are higher than you would pay at CRC/ Merlin etc but if what you need is not discounted then is an excellent way to get up to 40% off and pay over 12 months.
No downsides for me using it over the last 10 years and have another order arriving on Monday [Vector pedals and a carbon wheelset].

For the employee cyclescheme was always four years commitment to the bike, which might not suit - I don't know if this has changed with the recent raising of purchase limits. It's in line with what the scheme is ostensibly about - a workhorse commuter that you ride day in day out. So not something to use for a geometry experiment that you might get bored with after three months.

For the employee cyclescheme was always four years commitment to the bike,

Can I respectfully disagree. Neither the employee nor the voucher people give the slightest shit what happens to the bike after you buy it. So long as you pay the monthly cost for 12 months and then sign something afterwards to say that you'd like to hire it for another 3 ( 4,5? Can't recall) years for a nominal 1p ( or usually nothing).

They just aren't interested. HMRC would be interested in theory, but only if they know....

It's a few years since I looked at it, but at that time the main drawback was that you had to pay RRP. Maybe that's less of an issue now as everyone seems to be paying RRP for bike stuff anyway, but at the time I could get pretty much as good a deal by paying cash and taking advantage of discounts. Plus I had much more flexibility with where I shopped.

I have a similar issue with leasing cars. On first look it seems like a decent option, but I've always been able to get much better deals by buying with cash.

Can I respectfully disagree. Neither the employee nor the voucher people give the slightest shit what happens to the bike after you buy it.

In theory, but legally speaking it's company property until you either hand it back, buy it off them or the lease period ends.

Not sure if your parenthesis refers to netvor gross. If gross then your employer is breaking the law. It always needs to be net.

It's deducted at gross while in employment and then the balance as net if you leave.

Intrigued by this, or are you just saying that the payback duration of the self bought was much longer?
If so, that seems like a pretty pointless comparison.

Comparing Planet X to an equivalent bike from a C2W provider and taking into account all payments.

Cheers all,

Was thinking of helping co setup scheme for employees and helping with admin assuming it’s minimal and the finance dept would handle the majority of it.

Few of my team members have asked in the past and I’ve always told them they are crazy paying rrp, just get last seasons model / helped steer them away from heavy BSO’s.

Now not much choice but to pay rrp these days if you want a modern gravel / commuting machine with 1x, hydro discs, wide tyre clearance etc. As a result it lookslike cyclescheme or similar could be worthwhile and win / win for co’s + employees.

I always get asked because most of my time off is cycle related. As long as don’t have to bleed anyone’s brakes I’m fine with it. Helps keeps people fit, happy and good for the environment.

I never paid RRP on cyclescheme purchases in the past. It was always last years model at a discount. Situation is probably different now but in the past I just had a conversation with the shop/ online retailer and they decided if they wanted to do it.

but at that time the main drawback was that you had to pay RRP.

Incorrect. I've done 3 C2Ws IIRC. Got 10% CTC discount off the Evans one, got a free upgrade and £150 of accessories on the Halfords one.
The Stumpie was the absolute cream of the crop though.... Reduced at Evans from £5050 to £3100. Since they wouldn't allow me to top up the £3k voucher they just kept the £50 deposit and the voucher and called it quits at that. £5 grand Stumpie Expert for about £1,800. Be impressed if you can beat that by going non C2W. 😉
Oh, and think I also did a lights only one with CycleSolutions, which were listed way under RRP, so stupidly cheap.

In theory, but legally speaking it’s company property until you either hand it back, buy it off them or the lease period ends.

I think you're getting theory and practice mixed up. In theory, it’s company property until you either hand it back, buy it off them or the lease period ends.

In practice, I'd be interested to hear of anyone, ever, that has had this happen to them.

It’s deducted at gross while in employment and then the balance as net if you leave.

That's exactly what I said. I was replying to a post about what happens when you leave the company.

Even today you can still get offers.

( Well yesterday)

Got told I could use a Cyclescheme voucher to buy a rather nice carbon Giant which was 18% off RRP.
Or I could use the Halfords voucher and get a bit less than 18% off RRP ( as above, Halfords commission is 15% instead of the usual 10)

(Last year's model)

Green Commute Initiative seems to be the best scheme ( I've not used it, but seem to recall it is only 5% commission and no upper limit)
I think there is another advantage with it too, will Google it.

https://www.bikeradar.com/advice/buyers-guides/green-commute-initiative/

Green commute at first glance looks great.

So do the bike shops have to pay a commission to sell under these schemes?

So do the bike shops have to pay a commission to sell under these schemes?

Yep. As above, different ones have different charges. Halfords is 15% but Cyclesheme is less. Hence that Giant dealer above was willing to give me the 18% discount on CS, but reduced the discount if I paid by Halfords.

Edit

Here you go...

you would like to use your voucher against items which are currently REDUCED; we can only allow you the net value we receive from the Cyclescheme provider for your voucher.

Scheme Provider % to deduct
Green Commute Initiative 5%
most schemes 10%
Salary Extras, Caboodle 10%
Cyclescheme.co.uk Bikes, Clothing & Accessories 10%
Evans Cycles 12.5%
NHS (SME/vivup) 12.5%
Halfords 15%

From https://www.harryhallcycles.co.uk/info/cyclescheme.php

I've used it twice now. Last one was with Evans. Found the bike I wanted, applied for the voucher and the day I went to buy it, there was 10% off. Now you need to spend the whole voucher so the guy scratched his head and then said, go and buy stuff up to the value of the voucher.

You normally get a note showing 12 monthly payments, however to extend it for another three years I found you had to pay a 13th month payment of roughly the same amount (think its 7% of market value).

I used it to commute for two years, now it's my zwift bike.

I've had a couple of bikes this way (using cyclescheme, not employer direct.

The 4 years thing is a smoke-and-mirrors way of avoiding tax.

As strictly the bike is hired then after 1 year the value is determined by the HMRC. Something like 25% of original price on a bike over £500 (think that's the threshold).

So the dodge is that the scheme offers you 3 options after a year.

- hand it back. End of.

- buy now. Cough up 25% of value. Making the tax saving a lot less (depends on what tax you pay).

- smoke and mirrors arrangement - you 'hire' for another 3 years. And pay a deposit Something like 1 more months payment) then in another 3 years that say 'hand it back and have your deposit back, or we keep the deposit and the bike is yours. (The deposit handily equaling the hmrc % value of a 4 year old bike.

Take a 1k bike 12 monthly payment at 1000/12= 83.33. From gross pay.

If on 40% tax, that's equating to 50 in hand net.

Then a 1-off 83.33 from own net bank account.

So real cost (12x50) + 83.33 = 683.33.

Still saves 316 quid.

To add.

Planet X stopped doing bike to work a few years ago because the scheme take 10%.

You have a 1k voucher, the shop gets £900.

Some shops will tolerate that when tue mark ups are way more.

But for the likes of PX, Dolan and similar that run on tighter margins, that's costing them all the profit. Hence why PX stopped.

So in summary:

Potentially less scope to get a discount, in my experience asking gets 10% off most bikes if paying in full.
May find limited places work that scheme potentially limiting brands and bikes.
Limit is set by employer and typically £1-3k and some stores will refuse to let you top up.
If you leave a job during 12 months you will likely have to pay balance from post-tax pay.
In theory once you pay 3 or 7% extended hire you appear to be off the hook to pay more if you left employment but theoretically an employer could take the bike back, it is still their bike.
Bike shop may make less profit off bike, if that bothers you.
As it is salary sacrifice I have heard of a reduction in employer pension payment.

In reality the admin of these schemes appears slapdash. I didn't hear about extended hire last time, chased it to make sure of no surprises but neither the benfit supplier, employer nor scheme seemed to have a clue.

Yeah, reality is that you go in, state you are with x scheme and want a quote, that quote is what is sent to the administrator and then a voucher is issued to the amount, what the quote is can be with a discount, with extras, etc, etc, as long as it does not include items not exclusions to the scheme you're good to go.

As for the options, the reason you get to own it after 4 years is simply that it is your companies asset until then, so has a value, amortization allows them to write this off at a 4 year point, but not before, that's the difference between avoidance and evasion!

My second cyclescheme bike was a lovely Trek Stache in orange. Got stolen from my garage after 3 rides. I couldn't look at my pay packet for a year or I'd get mad! Oh and I extended the hire period on the stolen bike.

No one cares as long as you cough up.

Planet X stopped doing bike to work a few years ago because the scheme take 10%

The manufacturer can pass that on to the purchaser though. Thats what Bird do - it was a bit of a shock to learn I had to fork out another £400; but once I crunched the numbers I still came out with a £3k bike for about £2.1k. They folded that into the voucher; so I didnt have to pay anything upfront. Thankfully the scheme my employer uses (Bike2Work) lets you set any repayment period up to 4 years - I just extended my planned 12 months to 18 and the monthly sacrifice was as I'd originally budgeted.

I'd have appreciated it if there was some literature on Bird's website explaining how the Cycle Scheme works in relation to them, and that they pass on the Schemes fees to you - but I got over that pretty quickly and theres an Aether 9A in my garage now 🙂

Its one thing you dont read about anywhere actually - it doesnt state on any of the scheme websites about the fees they take from the shop/buyer; and most shops/manufacturers dont mention it either.

Planet X stopped doing bike to work a few years ago because the scheme take 10%.

My mate got a On One Parkwood via C2W and Planet X made him pay the 10% so they didn't lose much!

depends on company as to what happens after the final payment,
My company count it as a benefit in Kind that is Taxable.

BIK is 25% value of the bike over £500 [or 10% under £500.]
so a £1000 bike saves 40% HR tax payer, but BIK
= £1k x 25% x 40% tax = £100 BIK
Total saving £300 ..