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UK Cycle to Work Scheme

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UK Cycle to Work Scheme

Old 10-17-19, 02:23 PM
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rmwesley
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UK Cycle to Work Scheme

The UK government have recently dropped the 1,000 upper limit on the value of a bike / equipment you can purchase under the Cycle to Work scheme. It is now at the employer's discretion to set the upper limit, which means the scheme is suddenly a lot more attractive.

Not for lack of looking, but I haven't found anything which explains what kind of overall saving you could expect on the value of the bike. It looks like you "rent" the bike for 12 months, with the monthly rent equal to bike cost / 12 less income tax, e.g. if you went for a 1,000 bike and pay 40% tax then you would pay 1,000 / 12 * 0.6 = 50 per month, or 600 after 12 months. What happens next though? Do you pay a balloon payment to buy the bike outright? Is it some residual value of the 400 left to pay?

Anyone got any practical experience of the savings they got out of the scheme?
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Old 10-18-19, 01:09 AM
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And how does this affect people who already cycle to work on their own bike? Can we claim cash..?!
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Old 10-18-19, 05:30 AM
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Originally Posted by rmwesley View Post
The UK government have recently dropped the 1,000 upper limit on the value of a bike / equipment you can purchase under the Cycle to Work scheme. It is now at the employer's discretion to set the upper limit, which means the scheme is suddenly a lot more attractive.

Not for lack of looking, but I haven't found anything which explains what kind of overall saving you could expect on the value of the bike. It looks like you "rent" the bike for 12 months, with the monthly rent equal to bike cost / 12 less income tax, e.g. if you went for a 1,000 bike and pay 40% tax then you would pay 1,000 / 12 * 0.6 = 50 per month, or 600 after 12 months. What happens next though? Do you pay a balloon payment to buy the bike outright? Is it some residual value of the 400 left to pay?

Anyone got any practical experience of the savings they got out of the scheme?
i've used the cycle to work scheme twice now, and saved a bit of money, the monthly payment is deduced from your pre-tax salary and at the end of the 12 Months, you can either pay a 'own it now' or 'own it later' fee, the own it now is about 20% of the certificate value and the own it later is about 5%, which in affect extends your hire period for another 3 years at which point the bike is then yours. I've done the own it later on both of my schemes. My last bike I bought on interest free for 18months.
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Old 10-18-19, 06:29 AM
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Originally Posted by sw20 View Post
i've used the cycle to work scheme twice now, and saved a bit of money, the monthly payment is deduced from your pre-tax salary and at the end of the 12 Months, you can either pay a 'own it now' or 'own it later' fee, the own it now is about 20% of the certificate value and the own it later is about 5%, which in affect extends your hire period for another 3 years at which point the bike is then yours. I've done the own it later on both of my schemes. My last bike I bought on interest free for 18months.
Thanks @sw20 Apologies for flogging a dead horse, but...

If you pay the "own it now" fee, do you know what the certificate value is? Is it the original list price of the bike, or something else?

If you pay the "own it later" fee, is it just a 5% one time fee, or do you also then pay something monthly for the extended 3 year period, or is it 5% spread over 3 years, or ...?

Hand on heart I've tried to get the answers on Google, but all the info seems very opaque.

Cheers
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Old 10-18-19, 06:35 AM
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the certificate value is the total of what you borrowed, the own it later fee is a one off payment nothing else, then after 3 years the bike is yours, always do the own it later fee otherwise the scheme is pointless and you might as well take out a loan!
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Old 10-18-19, 07:10 AM
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love that you guys call it the scheme
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Old 10-18-19, 08:07 AM
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Originally Posted by Flip Flop Rider View Post
love that you guys call it the scheme
The noun...not the verb
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Old 10-18-19, 09:01 AM
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Originally Posted by tagaproject6 View Post
The noun...not the verb
The noun has a similar negative connotation in the US. We would use plan or program rather than scheme. My company used to have an incentive bonus program for reaching certain milestones. My manager (who was from South Africa) always referred to it as the "bonus scheme". Always sounded vaguely shady to me referred to that way.
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Old 10-18-19, 09:29 AM
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Originally Posted by sw20 View Post
the certificate value is the total of what you borrowed, the own it later fee is a one off payment nothing else, then after 3 years the bike is yours, always do the own it later fee otherwise the scheme is pointless and you might as well take out a loan!
I think I finally understand it If you go for the own it later option you're effectively saving yourself about 35% off the bike price. Assuming you pay 40% tax. Result. Thanks mate.
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Old 10-18-19, 09:34 AM
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rmwesley
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Originally Posted by NomarsGirl View Post
The noun has a similar negative connotation in the US. We would use plan or program rather than scheme. My company used to have an incentive bonus program for reaching certain milestones. My manager (who was from South Africa) always referred to it as the "bonus scheme". Always sounded vaguely shady to me referred to that way.
If it makes you feel better about the word, I'm actually using the money to purchase the bike through an off balance sheet, highly leveraged investment vehicle as part collateral for an illegal arms shipment through a series of Cayman Island banks
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Old 10-18-19, 09:36 AM
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Originally Posted by rmwesley View Post
If it makes you feel better about the word, I'm actually using the money to purchase the bike through an off balance sheet, highly leveraged investment vehicle as part collateral for an illegal arms shipment through a series of Cayman Island banks
Well, that's fine then. You are all set for a career in politics.
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Old 10-19-19, 01:37 AM
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They are finally looking at a similar scheme to this in one State of Australia, alongside a scheme to incentivise people to ride.
We really are a backwards place given how long the British scheme has been in place.

There is also murmurs from groups trying to get a "Driver's insurance" system in place like you have in the UK.
It is hoped that this will get some of our bad drivers off the roads and also make some people modify their bad driving behaviours..
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Old 10-25-19, 01:06 PM
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It's worth asking your organisation's HR department (or whoever manages the scheme) about the specifics. At my employer you theoretically have to pay a sum at the end of the 12 months to properly "own" the bike, but in practice they make no effort to collect and never ask anyone to pay anything. As far as they are concerned after the initial 12 month period the bike belongs to you with nothing more to be paid.
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