UK cycle to work scheme advice

[ReadyShreddy]

My term has ended for my cycle to work scheme and I have three options.

Own it later £250 and it's mine in 4 yrs
Own it now £1000
Or return it

Which option is the best, it says option 1 is most popular, but I'd want to sell the bike before four years is up.

Any advice?

 

[Gareth]

I’d go for option 1.

I didn’t know that the schemes differed. Mine you pay the bike up over 12 months (salary sacrifice). Then you have the option of signing an extended 4-year hire agreement at no extra cost. I don’t know anybody who hasn’t signed the extended hire. At the end of the 5 years the bike is ‘written off’ by the scheme and the bike is yours.

 

[ReadyShreddy]

With mine there is a final deposit that I must pay in order to get the extended hire, after the 4 years this deposit is used to complete the transaction at the end. After speaking to a few people I think I will also go for the extended hire, although I would like to upgrade my bike before the 4 yrs are over .

 

[steve_sordy]

@ReadyShreddy Forget what you have already paid, that option is common to all three options and in any case, you are not getting that money back. It's gone, forget it!

Option 1: Even if you really like the bike, I agree that you are unlikely to still want it after another 4 years (assuming it still works).
Option 2: If you buy it now, you are getting a good bike for £1000, that is if you like the bike. Even if you don't like it, you could pay the £1000 and sell it for more! And if you can't expect to get at least £1000 for it, then why are you paying £1000 for it now?
Option 3: If you return the bike, I assume that you will have nothing to show for it, except that you are free to buy anything you like.

The choice will depend upon your financial circumstances (see the thread on how you pay for your bike), and how much you like your current bike.

On balance, I favour option 3. Walk away with what you have learned about e-bike ownership and invest in a new bike of your choice. Put your £1000 into that new bike, unrestricted by the terms of your current cycle to work scheme.

 

[ReadyShreddy]

I think for £250 I'll keep the bike as it's still got one year warranty left from specialized, but I don't think I'll use the scheme again.

 

[Doomanic]

Just pay the 4 year hire option and do whatever you want with the bike. You won't hear from the scheme again except to try and get you to sign up again.
I use the scheme every year.

 

[steve_sordy]

Just pay the 4 year hire option and do whatever you want with the bike. You won't hear from the scheme again except to try and get you to sign up again.
I use the scheme every year.

If that is the case, why is there a "buy-it-now" option of £1000? Is that a con, or just the letter of the law?

 

[Doomanic]

It's to do with the time it takes for the asset to depreciate to the point that 7% covers the asset value. It's all explained on the C2W websites.

 

[Ou812]

I’ve looked at the Cycle to Work scheme and still don’t know how it works I don’t work here as I retired early before moving to the UK. My wife is employed by the council, when we looked into using it to buy my Levo it was going to be something like a £850 deduction every month for a year!

My wife is a higher earner so I don’t know if that has something to do with it but to me it was insane. The payment on her SUV isn’t even that much and it cost us £100k.

 

[ReadyShreddy]

Just pay the 4 year hire option and do whatever you want with the bike. You won't hear from the scheme again except to try and get you to sign up again.
I use the scheme every year.

Good to know, looks like I may be looking for a new bike earlier than expected

 

[Doomanic]

I’ve looked at the Cycle to Work scheme and still don’t know how it works

Clearly...

It's all explained very clearly on the C2W website but basically, if you buy a £10000 bike on C2W you pay £833.33PCM for it as a salary sacrifice which means it is taken before tax and NI. At the end, you pay an ownership fee which is dependant on which ownership fee you chose.
Own it now;

Own it later;

 

[Ou812]

Clearly...

It's all explained very clearly on the C2W website but basically, if you buy a £10000 bike on C2W you pay £833.33PCM for it as a salary sacrifice which means it is taken before tax and NI. At the end, you pay an ownership fee which is dependant on which ownership fee you chose.
Own it now;
View attachment 149472
Own it later;
View attachment 149471

I mean I get that, but I was under the impression the monthly payments would have been less, especially with the way everyone talks about the scheme. I was kind of shocked when I saw that £830 figure. I ended up just paying cash, then the shop gave me a hefty discount so the scheme would have only saved me around £1000 in the end.

 

[Doomanic]

What was the headline price of the bike? £830 is probably the pre-tax cost, as in the illustrations I posted above.

 

[Ou812]

What was the headline price of the bike? £830 is probably the pre-tax cost, as in the illustrations I posted above.

£10k originally, they ended up giving me the Spesh discounted price before it was announced then gave me another discount for paying cash and another discount as it was the last one they had in that size. I ended up paying £7500 for the bike. I was told that if I used the cycle to work scheme then they would charge full price for the bike.

 

[Jackware]

I mean I get that, but I was under the impression the monthly payments would have been less, especially with the way everyone talks about the scheme. I was kind of shocked when I saw that £830 figure. I ended up just paying cash, then the shop gave me a hefty discount so the scheme would have only saved me around £1000 in the end.

I'd rather have that £1000 in my bank account than someone else's

 

[Doomanic]

I'd rather have that £1000 in my bank account than someone else's

This.

 

[Ou812]

I'd rather have that £1000 in my bank account than someone else's

£1000 isn’t really that big of a deal in the grand scheme of things, it’s pretty much our monthly grocery bill

I wouldn’t have been able to use the scheme anyway as it would have to go through my wife. As soon as she saw the £830 a month she flat out said hell no, there’s no convincing her otherwise once she’s made up her mind….trust me, I’ve tried.

 

[Gareth]

As soon as she saw the £830 a month she flat out said hell no, there’s no convincing her otherwise once she’s made up her mind….trust me, I’ve tried.

That’s a very generous scheme allowing you to buy a 10k bike before tax!

So basically that 830 quid a month is before you pay tax and NI. It all depends what your earnings are, but as you say your wife is an upper rate tax payer, then she pays for the bike before she pays tax 40% and NI on her income. That is effectively a massive discount. Typically, the bike would cost her about 5.5K in real terms if priced at 10K.

There is no good reason why the bike shop couldn’t sell you the bike at a discount on the scheme either. However, most bike shops ask the customer to pay the scheme administration on the sale when a bike is discounted – on my scheme that would be 10%. So the bike shop would get 7.5K plus the 10% for admin.

So I’d estimate the bike would have cost your wife roughly £4,500 in real terms on the scheme as opposed to paying £7,500

It almost half price bikes. I love it.

 

[Dax]

I mean I get that, but I was under the impression the monthly payments would have been less, especially with the way everyone talks about the scheme. I was kind of shocked when I saw that £830 figure. I ended up just paying cash, then the shop gave me a hefty discount so the scheme would have only saved me around £1000 in the end.

£830 is pre-tax. So her take-home hit is roughly half that. It’s quite a tax-efficient way of buying a bike if you are higher rate tax payer.

 

[Type1]

Just pay the 4 year hire option and do whatever you want with the bike. You won't hear from the scheme again except to try and get you to sign up again.
I use the scheme every year.

+1

 

[mooby77]

+1

Yes same here , 2 bikes down and the same

 

[Zed.]

you can also buy parts with the c2w, my mrs bought Ohlins forks & rear coil damper this year

Rich.

 

[Perryqhill]

Just pay the 4 year hire option and do whatever you want with the bike. You won't hear from the scheme again except to try and get you to sign up again.
I use the scheme every year.

This. The 4 year hire options is simply something they've had to introduce as a way of writing the value of the bike off because there was criticisms of the previous schemes and the way the tax benefits were being used.

I bought a kids bike on mine and it was of no use after a few years and sold on. I paid the 4 year hire /final value fee around 11 months of ownership and never heard another thing since.

 

[Binhill1]

My son got one it had a £1000 off then his discount through scheme was 35% . It's more cost effective if your a high earner. I occasionally borrow it.

 

[jackamo]

My term has ended for my cycle to work scheme and I have three options.

Own it later £250 and it's mine in 4 yrs
Own it now £1000
Or return it

Which option is the best, it says option 1 is most popular, but I'd want to sell the bike before four years is up.

Any advice?

Pay the £250.

I've done C2W for over 20 years and have never heard of any employer taking the bike back .
It's only to cover them as a company ' asset ' because they initially bought it .

 

[ReadyShreddy]

I paid the £250 the other day. I'm going to keep this bike for a few more months then gat another one with the scheme.