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Hi, I know that the cycle to work scheme doesn't sit easily with everyone on this forum but could someone please check my thinking here.
There are ebikes on sale at the moment, some round figures for example purposes:
Original price £7000
Sale price £5000
24 monthly payments of £120.83 and a nominal £1 final payment (at some point) equates to a saving of £2100 or 42% of the £5000.
So for what was a £7k bike, I would end up paying ~£2900?
Is that right?
Don't forget to knock the VAT off but is there any indication on how final valuation and/or scheme extension is done??
Final payment is often more like 7% of the value for bikes over £500.
Nominal payment will be higher at three years. You are renting the bike. Also this depends on whether you can access the sale price on the bike to work scheme - some won't allow discounts using the voucher.
My £1525 bike was 18 monthly payments of £85 of which £42 was tax reduction + a final payment (which was made directly, not via salary sacrifice) of £125.
Total payable £900.
A few points I found were that some shops exclude e-bikes from the scheme, and more exclude bikes on sale from the scheme, because there isn't enough profit margin left in them.
Also the final payment will be closer to £400, or at least it was in my case.
<p style="text-align: left;">Most places also charge a fee of 5 to 15% on sale bikes bought using a voucher. My work use green commute initiative which has the lowest fee (5% generally)</p>
They have useful calculator on the website.
I am buying a similar value emtb and will push payment out to 18mths based on keeping my last bike 12yrs I don't expect to chop and change often
Your employer benefits website or C2W provider may have a calculator to remove the guesswork. Mine used cyclesolutions which included a 12% discount off RRP and an option of an extended rental period after final payment at no extra cost. Although you won't technically own the bike until the end of the period, you'll maximise your savings. Also doesn't appear to charge any extra fee for sale bikes.
+1 for using some more specific info from your scheme. There’s quite a range in how they work. Also a lot of retailers add a 10% premium to sale bikes as most C2W schemes only give the retailer 90% of the voucher Dave value. Also your tax bracket makes a big difference (which you may or may not want to share publically)
VAT? So for a starting price of £5000, I should instead be using £4000?
That would bring the original £7k ticket price down to ~ £2.3k?
I'm basing this on the Green Commute scheme, which states...
When the 3-month Hire Agreement with GCI expires, we will contact you with ownership options. We will recommend that you take the Extended Loan option (5 years and 9 months) to take the bike to 6 years old. At this point, there will be no Benefit-in-Kind tax payable to HMRC. If you want to take ownership before the bike is 6- years old, we will advise your payroll department of the tax payable for your P11D.
@cb - seriously just use their online calculator. There are so many variables here that you’ve no chance of figuring it out, or people helping you to otherwise.
I used the calculator to get to my original position. VAT was then mentioned and I wonder if I need to subtract that from the "sales price" of the bike that I see in the shop?
I doubt it - the price you put intothe calculator is likely to be price Inc VAT. I’d dig into the website T&Cs for info on that.
I agree, it would be crazy cheap if another £1k comes off the starting price. GCI don't seem to list the bike shops that they work with!
Mine was through Cycle Solutions where the extended hire period is 4 years I think. But zero final payment.
It's deducted from your salary tax liability, so you're saving your tax rate + NI. If you're a high rate tax payer you save more.
As mentioned, because of the variables it's best to do it on your work website to get an accurate figure that you will see your salary deducted by.
The VAT comment above is a red herring. When the C2W scheme was originally introduced the employer could reclaim the VAT. This is no longer the case.
Thanks for the clarity doomanic
Look on GCI website under 'shops' there are loads of them.
Thanks - not sure how I mssed that!
Seems I managed to convince myself!
Whyte E160 RSX on its way.
I'm hopeful that this will be the kick that I need to get over the 'sat on my arse' inertia and regain some fitness. A smashed up hip and work pressures have turned me into a tub of lard.
Bugger, think that I may have misunderstood / simplified my thinking here.
If the bike is £5800
I pay roughly £3400
Where does the difference go? Is the employer on the hook for the full £5800? That is to say they are offering the employee an additional £2400 of benefit in their pay 'package'?
There will be some NI employer savings but nowhere near enough to recoup the £2400 difference.
Your employer keeps 5800 from your pre tax salary rather than giving the taxman 2400 and you 3400.
OK, thanks! makes more sense now!
I would check with the shop before getting excited though, lots don't accept vouchers at all on anything under full RRP
Sigma sports at 10% to on sale bikes...
Got the info from the shop - they accept sale bikes and ebikes and charge a premium direct to the customer which is scheme dependent. For GCI its 5% of the sale price plus £25 shipping fee. So £320 in this case over and above the 'scheme numbers'.