Cycle to Work Scheme

[Patfig]

Hi All

Not sure if this is the best place to ask this but anyway....

I juts got a quote from teh cycle to work scheme as an employer for one of my employees. He wants an electric mountain bike to come to work on.

The bike is £ about £2500 ( including VAT)

He has been quoted over 12 months payments that just about exactly cover the £2500 and of course these are made before tax and NI deductions.
However after the 12 moths the payment quoted for him to own the bike is £834. I haven't worked out teh numbers to the last penny but this seems like a bad deal to me.

Has anyone else used this scheme

PF

[stodd]

I can't help directly, but if you ask at Pedalecs there will be more people who might be able to.
https://www.pedelecs.co.uk/forum/forums ... cussion.2/

Sounds like a good deal ... for the people running the scheme that is.

[rbrian]

My employer hasn't yet raised it from £1000, which isn't enough for the bike I wanted. I did the sums anyway, assuming I could get a bike shop to accept part cash (which was explicitly forbidden in the terms and conditions). For the £1600 bike I bought, it would have saved me a total of £60. I got interest free finance from the bike shop instead, so for an extra £5 per month, I own the bike outright, with no rules about using it mostly for commuting. The next bike I bought was £2700, I paid for that with a 0% credit card, I still have 13 months left to pay it off.

Perhaps you could look at rolling your own salary sacrifice scheme, which should have much the same tax benefits.

[Runragged2]

Hi
Look at the terms very carefully, most schemes have a sting in the tail as a charge to transfer ownership at the end of the 4 years. Greencommute have no such charge and we have used these for three employees so far.
Savings depend upon how much tax you are paying.

[PH]

EDITED - OK, deleted my first post that contained some errors - when/if the bike ownership transfers from employer to employee at the end of the hire period, if it isn't for the fair market value, then the employee is liable for tax on that difference, because it's a taxable benefit. You can at no cost extend the hire period to the point where there is no value to transfer, there's a table in the link which says what percentage of the original cost is considered the fair value and this is what you pay tax on.
http://podium4bikes.com/fair-market-value/

The example in the OP looks like a dreadful deal, I don't know why anyone would accept it.

[Runragged2]

The answer is to transfer ownership after 6 years where the value is nil or nominal, as pre the greencommute scheme

[Bonzo Banana]

With ebikes the batteries have a limited life and if the bike is genuinely used for commuting might only last 1-2 years at full capacity or maybe up to 5 years with less use. I think the number of charges at full capacity can range from 500-1000 and after that capacity can reduce quite rapidly.

Also the motors themselves can have a limited life and be expensive to repair the more complicated and premium they are.

I feel the level of complexity of ebikes means the market value should come down more rapidly compared to conventional bikes. You buy a bosch mid-drive ebike and a battery replacement can be very expensive, the motor's can fail and be uneconomic to repair and the bike frame itself is purposely designed for only that motor which means its pretty much valueless at the end of life beyond its warranty. I guess you could make the case with such a bike you simply don't want to take ownership after a certain number of uses it's had its use and is pretty much a money pit at that point. I certainly wouldn't want to pay £800 plus for such a bike at that point.

I would of thought 3 years was a good amount of time to right off the value of a ebike with perhaps 6 years being fair for a conventional bike.

[PH]

I'm still unsure what's going on here, which scheme provider quoted this? It doesn't seem to make any sense, the only liability is to pay the tax on any benefit in kind, even taking ownership after 12 months, it shouldn't come to more than £187 (For a standard rate taxpayer), not the £834 quoted. That's considerably more than the guidance for the full market value. Seems to me you're being asked to pay for the bike twice!

[Runragged2]

The best way to do this is to set the transfer of ownershio to 6 years, so there is no residual value
Greecommute scheme looks to be the best.