[Closed] CycleScheme - any downsides to paying over 4 years instead of 1?

I didn't know you could!

For c2w to make any sense you have to keep it as a lease until its depreciated to nothing anyway.

I guess the issue with doing it over 4 years is that you have to be fairly certain you'll still be at the same employer for that long. Same applies to the 12 month in that respect while you wait for it to depreciate and then get signed over to you.

No, not really unless there’s something on the scheme that says you can’t have another bike whilst paying for the first one. Depending upon how the company run the scheme, 4 years can be an advantage as the bike will have no residual value at this point, whereas at one year they could say the bikes residual is higher than what you’ve saved on the scheme, meaning you pay more than retail.

Obvious problem is you can't buy one every year like some people do.

If you do it right, you can sell them after a year for around the same price you've paid for them and then get a new bike.

But if your not planning on doing that then its OK.

Does it matter if you change employers as long as you are earning and paying tax?

AIUI your employer owns the bike until you've paid it all off.

Hence changing employers or selling the bike could be potential issues.

If you are likely to stay put, and aren't a serial bike swapper, why not spread the cost?

It would be unusual if that were really an option. Normally, when you see the 4 yr option it refers to how long until you "take ownership" of the bike, but not how long you pay for. That would still be 12 (sometimes 18) months.

It's all a merry go round really, because it all turns on the fiction that you "rent" the bike for an amount which in total coincidentally matches precisely with the retail cost, and then you scramble to keep it at the lowest further cost and the employer gets rid with minimal hassle of a bike it owns but never wanted.

So you pay your 12 monthly rental payments, then you either take ownership immediately (with the tax ramifications of your employer gifting you a 12 month old bike) or pay a very small "long term rental fee" and delay taking ownership until 3 years later (with the much more palatable tax ramifications of your employer gifting you a 4 yr old used bike).

I suppose your employer going bankrupt while they still own the bike is more likely with three added years. That's the only risk I can see, and it's pretty small that (a) it would happen and (b) anyone would chase that particular asset.

Other might see other drawbacks.

Requires a very generous employer to tie up the cash for 4 years rather than one for the same financial gain (for them). On the flip side if you are a 40% tax payer but only a little bit you might get it all at the higher rate rather than only a bit of it. Or if closer to minimum wage you might be allowed to use the scheme when otherwise you might not as your wage would be too low.

You don't have to stay at the same place for 4 years, though 12 months is pretty useful.

At the end of the 12 month period, you pay the 'ownership fee' which covers the following 3 year period.  This is 7% of the retail value.  If you move job after 12 months, as long as you have paid the ownership fee it doesn't matter.  There is a video on the cyclescheme website that explains it:

https://help.cyclescheme.co.uk/article/42-what-is-an-ownership-fee

If you change job before the end of the 12 month period, you pay the balance of you salary sacrifices but without the tax benefit, again from their website:

"For example, if an employee is on a 12-month scheme, and have had 4 Salary Sacrifice repayments taken from gross salary prior to leaving employment, the remaining 8 should be taken from their final NET salary.

If the employee has benefited from Income tax and National Insurance savings they are still likely to be liable for an ownership (End of Hire) payment. However, the employee will never pay more than RRP for the bike in this scenario. "