[Closed] Expensive bike on cycle to work - feasibility & wisdom thereof?

Unsure why you'd think 5k on a toy wasn't expensive for anyone...
From what I understand they are obliged to offer you the bike for a final nominal fee - but the fee isn't a fixed amount, so if they didn't want you to have it, they could offer a huge fee and you'd reject it and hand it back.
Haven't heard that happen but a few mate's got a surprise when their nominal fees were higher than the monthly repayments they had made - not massively but I think it was circa 100 quid more and was dressed up as some sort of admin fee thing.
Unsure that has helped other than agreeing with you that 5k is a lot of money to spend on a bike (so enjoy it when it arrives!)

Your company should state what the options are, if you take up the option after year 1 then it's fair market value, so pretty much all you've saved, most companies offer the rehiring option, so i think another 3 years for a nominal fee (£1 or the likes in many instances), then after that 3 year hire (4 in total), the bike is yours.

Ask the person in your organisation that runs this thing, most just play the game and take it for the 4 year hire to get it without any extra cost, guessing this is more to do with amorisation of assets, as that bike is owned by your company.

Those I've seen state up front what happens in various scenarios such as end of the hire period (in those, it was they will gift you the bike), or you leaving the company.

I hadn't heard that the £1k limit had been removed. Just ran some numbers on the cyclescheme calculator now, seems a generous gift from the public purse to high earners buying expensive bikes.

Thanks, yes it's expensive though I haven't decided if I'm doing it yet 🙂 I'm definitely going to ask about this with the benefits guys at work, see what they have to say. Depending on the limit my employer enforces this may be a non-starter anyway.

Just wondering if any experience is out there around these things is all

I’d be keen to know more on this also, I’m looking at a road bike around £3000 on c2w at the moment, well, when they pull their fingers out at work that is...

seems a generous gift from the public purse to high earners buying expensive bikes.

This. I don’t earn enough to qualify for 40% off a £12k toy to play in the mud with. Others don’t earn enough to qualify for 20% off a £500 commuter to get them to and from work.

For clarity, my issue is with the game, not those that play it.

What if you want (or need) to sell the bike after the initial salary sacrafice period, but during the £1 extended loan period?
Anything to stop you selling, would anyone (HMRC) ever know??

At that point you aren't the owner of the bike, your employer is so HMRC wouldn't be bothered but it would be some kind of theft or deception. Unlikely you'd get court.

Yes pedant, court not caught. 😁

You could view it as a tax dodge, but there are plenty of shady schemes for those.

This is a legitimate scheme as an incentive to cycle. I don't really think it's about 'cycling to work' (hence the complete lack of checks on commuting use) it's more about making the cycling industry more viable, increasing health, reducing pollution and congestion.

There are lots of salary sacrifice schemes, share purchase options, extra pension contributions, I remember years ago I could buy computer and laptop equipment though salary sacrifice.

Yes it's a bit of a dig that higher earners save more, but then so is paying 40% of your higher earnings as tax!

My work use Halfords and from memory you can either buy it after 12 months for a percentage or extend the agreement for another 3 years for free. After this, the bike is worth a negligible amount and you can dispose of it as you wish.

I will obviously be doing option 2.

BTW, you can take out another CTW agreement after 12 months even if the 3 year period is still running 😉

Unless things have changed, then technically there cannot be a legal obligation to sell to you at the end of the scheme because it changes it from rental to hire purchase and it then falls outside the tax exemption.

In practice, they always will, because if they didn't, nobody would ever use the scheme again.

I think they key point is the end of the initial hire period. I think at that point they can then commit to sell to you in the future.

I think the thing to be concerned about would be your company or the scheme operator going bust before you own the bike.

Check the rules of your scheme. Mine states the majority of the bikes mileage should be for Cycling 2 Work. As my employer is HMRC, I haven't taken the piss just in case they wanted to check 😁

I can see the generosity of the scheme being looked at again, so the next year or two might be a good time to make the most of it. I believe the reason for removing the limit was to allow more ebikes to be affordable.

For me two things to think about are:
Is your company happy to pay out so much money at the beginning of a catastrophic recession?
Are you happy to pay off all the value in one go?

Don't ask your hr, they will just read the small print that you have, ask someone at work who's completed.

My old employer required the 4%/7% hire extension, my current employer waives it (they must pay it).

Unless things have changed, then technically there cannot be a legal obligation to sell to you at the end of the scheme because it changes it from rental to hire purchase and it then falls outside the tax exemption.

In practice, they always will, because if they didn’t, nobody would ever use the scheme again.

I think they key point is the end of the initial hire period. I think at that point they can then commit to sell to you in the future.

Pdw nails it. Legally they can't tell you the option up front as it becomes HP.

I've done a few C2W and they worked fine. First one was years ago before HMRC clampdown, so there was no residual charge at all. The third one was evans, which was the best. They sent me an email after three years asking if I'd like to continue hiring it for a further two years for a penny. Which then reduced the BIK to a negligible amount, which I might also have paid them.... It was so small and inconsequential that I can't remember.

I think on the second one they taxed me on the BIK after the initial period, o think it was around 60 quid or something.

The 4th one has only just started. The options they presented at the start weren't that great TBH, but as stated above, these are only indications so I'm not bothered. I'll just see what they come up with at the end. Given that I got a £5050 bike for around £1900 I'm not going to stress unduly (it had 30% off at Evans already)

seems a generous gift from the public purse to high earners buying expensive bikes.

Yes agreed it's a shockingly badly thought out system and very unfair. But as alluded to above, so many things on the UK financial system are... See share purchase options etc

Mine states the majority of the bikes mileage should be for Cycling 2 Work.

Whether they state it or not, those are a requirement of the tax exemption. On the other hand, the HMRC guidance says that there's no requirement for the employer to check this.

My old employer required the 4%/7% hire extension, my current employer waives it (they must pay it).

Are you sure about that? I think you've got the wrong end of the stick. Your employer has already paid it. Why would they pay it again. This isn't about who pays the shop for the bike, this is about BIK (benefit in kind) and the taxman getting his cut.
As per my second example above, my employer waived the final payment, but then I had to pay the taxman the tax on that money...

The taxman could in theory come after you for that tax.

Nice one, thanks for thoughts all.

This

I think the thing to be concerned about would be your company or the scheme operator going bust before you own the bike.

Is a good shout

I'm tempted to use one of these CTW schemes, but not being the actual owner of the bike for 4 or 6 years with some schemes, bothers me - not sure I wouldn't be looking for an upgrade / replacement long before then!

I bought one at the maximum allowed for our company (£3K plus £500 of my own money). After six years, apparently this now upgraded Dura Ace carbon bling machine has zero value and I am not required to repay anything. Had I wanted a useful bike from the B2W scheme during that period (Brompton), then the repayment was pretty high. Think about that.

Is your company happy to pay out so much money at the beginning of a catastrophic recession?

I think this will be my issue. New employer from Sep and a long commute that I want to do as much as possible on my bike. But as a bit of a bike tart/snob and the commute being 25 miles each way it's very unlikely the bike I'd want will come in below £1K so will be down to me to challenge the old £1K limit they still have on policy. Being the new boy asking if they fancied finding £3K for my new bike when they have just made 25% of the employees redundant (and I dodged the bullet by the skin of my teeth) feels like it would be waving the 'I'm a self entitled dick with no sense of perspective' flag good and proper.

Are you sure about that? I think you’ve got the wrong end of the stick

Yes, it's happened twice, unless I've got the wrong end of the stick both times. My employer is very keen on any schemes that help employees stay healthy, at head office in London they give anyone who cycles to work £1 a time, so they have plenty of previous.