Yet Another Cycling Forum

General Category => The Knowledge => Topic started by: thing1 on October 25, 2019, 01:55:42 pm

Title: CycleScheme remove £1,000 price cap
Post by: thing1 on October 25, 2019, 01:55:42 pm
Just found out cycle scheme have totally removed their limit on bike+accessory purchases
https://www.cyclescheme.co.uk/cycle-to-work-scheme-any-price

As they are now the legal "loan provider" of the bikes, they can do this under their own FCA Authorisation loan authorisation without needing each employer to get their own license.

This is great -- back with cycle scheme was launched the £1,000 limit set a pretty nice prices point, but there's been 100% inflation in the intervening 2 decades so on inflation alone if buys you half as much bike as it would have back then.

This is "opt in" for each employer using the scheme, and they're recommended to set their own loan limits. Mine has just started trialing £5,000.
Title: Re: CycleScheme remove £1,000 price cap
Post by: robgul on October 25, 2019, 04:43:56 pm
.... bear in mind when looking at prices the supplying shop has to give 10% on bikes and 15% on parts/accessories to the Cyclescheme plan (and a higher % to the Halfords scheme) - so don't expect stonking discounts on anything.

That said, I do quite a few deals with most customers being higher rate taxpayers so a pretty good saving for them.

Rob
Title: Re: CycleScheme remove £1,000 price cap
Post by: Pickled Onion on October 27, 2019, 06:35:06 pm
.... bear in mind when looking at prices the supplying shop has to give 10% on bikes and 15% on parts/accessories to the Cyclescheme plan (and a higher % to the Halfords scheme) - so don't expect stonking discounts on anything.

That said, I do quite a few deals with most customers being higher rate taxpayers so a pretty good saving for them.

Rob

Good point. But it's very worthwhile for bikes like Bromptons where discounts are not possible.
Title: Re: CycleScheme remove £1,000 price cap
Post by: rogerzilla on October 28, 2019, 10:41:18 am
How many of these bikes are actually used for commuting, I wonder?
Title: Re: CycleScheme remove £1,000 price cap
Post by: Kim on October 28, 2019, 12:22:53 pm
How many of these bikes are actually used for commuting, I wonder?

I expect most of the Bromptons are.  Likely a good proportion of the e-bikes that will now be possible.

I reckon subsidising weekend warrior MAMILs is probably still worth it from a public health perspective.  The main problem is people buying bikes, trying the commute a few times, deciding that it's horrible, leavign the bike in the shed and switching back to the car or public transport.  I don't think that's a problem that can be solved by changing the way people buy bikes.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Cudzoziemiec on October 28, 2019, 12:35:24 pm
I keep seeing this title and thinking "Even Rapha caps don't cost that much."
Title: Re: CycleScheme remove £1,000 price cap
Post by: ian on October 28, 2019, 01:10:24 pm
I'm a higher rate taxpayer and, yes, I cashed in a cheaper Brompton. I didn't really need the saving I would have bought one anyway (my zone 6 travelcard is ~£2.5k). I have mixed feelings about the scheme achieves, but I expect it's relatively cheap and indeed, even if gets a few MAMILs out at the weekend, there might indeed be a net benefit. It's the sort of thing that could be measured with relative ease, but that might imply evidence-based policymaking which simply won't do.

It won't change that fact that most of our roads (or rather the people in vehicles on them) are inimical to cycling. But hey, it's a tiny bit of subsidy that, for once, isn't being handed to drivers.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Kim on October 28, 2019, 01:21:42 pm
Absolutely.  The whole thing is well worth it for the people who it enables to cycle (even if not on the commute, because - contrary to popular opinion - commutes aren't somehow more worthy than other journeys people make) by overcoming the affordability of bikes problem.  Which is very real for those who require expensive or nonstandard bikes for disability reasons (https://wheelsforwellbeing.org.uk/campaigning/); need a quality folding bike (either because of a multimodal journey, or a lack of secure storage); or who simply wouldn't be able to afford the up-front cost of a half-decent bicycle after paying for the season ticket that cycling will mean they'll no longer need.

The well-off will always game the system.  That's a shitty reason not to have a system.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Greenbank on October 28, 2019, 03:30:34 pm
How many of these bikes are actually used for commuting, I wonder?

I stuck to the rules within the first year of ownership of my Wilier. Back then (2009) it was something along the lines of "the majority of use of the bicycle must be for commuting".

If I used it for n non-commute rides, I made sure I used it for n+1 commutes. If they measured it by distance or total time I would have been in trouble as every single one of the non-commute rides was way longer than my 12km commute, as they included rides like the Snowdon & Coast 400km Audax, and the Kernow & SW 600km Audax.

(We also had a £1500 limit rather than the standard £1000 limit, and I negotiated buying a discounted "last year" bike too [by paying a bit more than the discounted cash price to cover the scheme costs], and paid the extra with a credit card [which was also verboten I believe].)

Regardless of how I (ab)used the scheme, it's great for people that do make the transition from a train/car/whatever commute to a regular bike commute because they now have a sensible commuting bike with the cost spread over the year (the discount is a slight bonus). I know some people who felt trapped by their annual train season ticket and the fact that they could spread the cost of that over the year via a loan from their employer.

As has been said before, the Government should just get rid of VAT on bikes (and bike related accessories) and then they can simplify things by binning the scheme although that does cut off access for people who can't afford the up-front cost (a loan system like the season ticket loan doesn't work so well as the bike can't be sold for a proportional refund like a season ticket can be.)
Title: Re: CycleScheme remove £1,000 price cap
Post by: ian on October 28, 2019, 03:47:37 pm
I can't say I've ever met anyone who's switched to commuting by bike because of the scheme, it's just a handy way to get a discount. They mostly buy something relatively modest from Evans or the like, or something second-hand/nicked (I'm not sure anyone can distinguish). This being London, there's a fair chance any bike in regular use will get nicked. The main push towards commuting by bike in London is, of course, the cost of the alternative.

I think my main concern isn't the scheme per se, it's that it's a way they can pretend that they're doing something for cycling when the actual impact is probably minimal. Like you say, taking VAT off bikes etc. would make more sense.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Kim on October 28, 2019, 04:26:07 pm
Pesky EU regulations prevent them from zero-rating VAT on bicycles.  (Unless they're designed or adapted for use by a disabled person, in which case the dealer can[1] apply an exemption.)


[1] But probably won't, unless they're sufficiently disability-oriented that they're used to the associated paperwork.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Greenbank on October 28, 2019, 06:53:52 pm
Pesky EU regulations

One way to solve that - the very definition of a Pyrrhic victory.

The other way, of course, is to lobby the EU for removal of VAT on bicycles to encourage uptake and associated health benefits.
Title: Re: CycleScheme remove £1,000 price cap
Post by: robgul on October 28, 2019, 07:19:57 pm
Recent research by the cycling trade body has suggested that the removal of VAT would have little effect on the number of bikes sold (or usage thereof) - it's the whole attitude to cycling that needs the shift . . . . of people coming into my shop to potentially buy a bike they almost all express concerns about the roads and motorised vehicles.

Rob
Title: Re: CycleScheme remove £1,000 price cap
Post by: ian on October 28, 2019, 07:51:41 pm
I'd agree, it's not really a price/cost issue. I'm sure you could give away bikes and see little change in behaviour because the things that stop people from cycling remain.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Kim on October 28, 2019, 08:33:28 pm
I'd agree, it's not really a price/cost issue. I'm sure you could give away bikes and see little change in behaviour because the things that stop people from cycling remain.

The Big Birmingham Bikes project actually tested this, giving away about 3500 bikes, with dynamo-powered GPS trackers to monitor usage, by postcode-lottery to people in areas with poor health outcomes.  This was backed up by assorted schemes encouraging non-cyclists to learn to ride.  The presentations I've seen show that some of them are getting proper use, but frustratingly I can't find any of their stats on the interweb.  Riding around Birmigham some 3 years later, I'd say they were approximately as common on the roads as Bromptons.

Pretty much every conversation I've ever had with a BBB rider has brought up the oppresive traffic conditions and lack of infrastructure.

(Here's a PushBikes article summarising the project: https://pushbikes.org.uk/blog/big-birmingham-bikes-update)

Title: Re: CycleScheme remove £1,000 price cap
Post by: Pickled Onion on October 28, 2019, 09:38:21 pm
I can't say I've ever met anyone who's switched to commuting by bike because of the scheme
There are at least two in my department who have. Though they were both cyclists already. One didn't have a bike since he moved to London, bought a bike on the scheme and cycles every day now. The other lives in Sevenoaks and took his brompton on the train. He started getting off the train at the boundary of zone 1, then zone 2, then bought a road bike on cyclescheme and uses it to cycle all the way a few days a week.

Quote
... it's just a handy way to get a discount.
True, but that (and the spreading of the cost) means people tend to spend more, which means they have a more suitable/reliable bike, so they are more likely to keep using it than if they had a BSO.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Cudzoziemiec on October 29, 2019, 09:17:14 am
And if people are spending more it acts as an extra source of revenue (should it be considered an indirect subsidy?) to bike shops, which mean they're still alive and that helps cycling in general in various ways.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Pickled Onion on October 29, 2019, 07:07:47 pm
GPWM.

My first brompton lasted ten years of daily use before it fell to pieces. Now I'm using cyclescheme, I buy a new Brompton every year, something I would never consider if I were spending "my own" money.
Title: Re: CycleScheme remove £1,000 price cap
Post by: CAMRAMan on November 01, 2019, 07:39:37 am
Good luck with getting a 25-30% discount on a Brompton...
Title: Re: CycleScheme remove £1,000 price cap
Post by: ian on November 01, 2019, 09:36:53 am
It's a somewhat bigger 'discount' if you're a higher rate taxpayer.

I'm not sure I'd buy a new one each year though, this one (actually my wife's) is about five years old, but has only been extensively ridden for commuting this year. Needs some new brake blocks (I did buy some, but my attempt to replace them, well, erm, wasn't successful). That said, I do have a back-up more chunky folder.
Title: Re: CycleScheme remove £1,000 price cap
Post by: C-3PO on November 01, 2019, 10:00:21 am
Masters, we'll have none of that behaviour here, please.

Posts tidied up to a place where they may only be seen by higher beings.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Jurek on November 01, 2019, 10:19:33 am
It's a somewhat bigger 'discount' if you're a higher rate taxpayer.

I'm not sure I'd buy a new one each year though, this one (actually my wife's) is about five years old, but has only been extensively ridden for commuting this year. Needs some new brake blocks (I did buy some, but my attempt to replace them, well, erm, wasn't successful). That said, I do have a back-up more chunky folder.

Pop round at some point and I'll change your brake blocks for you.
Title: Re: CycleScheme remove £1,000 price cap
Post by: grams on November 01, 2019, 11:24:47 am
My first brompton lasted ten years of daily use before it fell to pieces. Now I'm using cyclescheme, I buy a new Brompton every year, something I would never consider if I were spending "my own" money.

Presumably you sell on the old one? Have you worked out how much this costs you net per year?
Title: Re: CycleScheme remove £1,000 price cap
Post by: Jaded on November 01, 2019, 11:38:54 am
GPWM.

My first brompton lasted ten years of daily use before it fell to pieces. Now I'm using cyclescheme, I buy a new Brompton every year, something I would never consider if I were spending "my own" money.

Goods stuff - empty ashtrays!  ;D
Title: Re: CycleScheme remove £1,000 price cap
Post by: ian on November 01, 2019, 06:32:01 pm
It's a somewhat bigger 'discount' if you're a higher rate taxpayer.

I'm not sure I'd buy a new one each year though, this one (actually my wife's) is about five years old, but has only been extensively ridden for commuting this year. Needs some new brake blocks (I did buy some, but my attempt to replace them, well, erm, wasn't successful). That said, I do have a back-up more chunky folder.

Pop round at some point and I'll change your brake blocks for you.

Oh, I sort of know what I'm doing (and I will now disprove this). I change brake blocks all the time because I live in the place with hills. But these are the insert kind, so I bought some inserts and figured, you know, undo the little screws, slide 'em out and Bob's your mother's slightly iffy brother. Except, no, it didn't just slide out. It took a hammer (and yeah, I did them in the direction it said). And I got covered with black stuff to the point I'd have passed for Justin Trudeau at a party. Then the other one, the little allen screw thing was stuck, a bit more juice was applied and anyway, I guess I need the entire block now.

Then it got dark and there's still a bit of rubber left and who the hell needs brakes anyway.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Pickled Onion on November 01, 2019, 06:37:23 pm
My first brompton lasted ten years of daily use before it fell to pieces. Now I'm using cyclescheme, I buy a new Brompton every year, something I would never consider if I were spending "my own" money.

Presumably you sell on the old one? Have you worked out how much this costs you net per year?

It *think* it leaves me with a surplus, not much, enough for a few beers, I'll do the sums later and post back.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Kim on November 01, 2019, 07:38:57 pm
Oh, I sort of know what I'm doing (and I will now disprove this). I change brake blocks all the time because I live in the place with hills. But these are the insert kind, so I bought some inserts and figured, you know, undo the little screws, slide 'em out and Bob's your mother's slightly iffy brother. Except, no, it didn't just slide out. It took a hammer (and yeah, I did them in the direction it said). And I got covered with black stuff to the point I'd have passed for Justin Trudeau at a party. Then the other one, the little allen screw thing was stuck, a bit more juice was applied and anyway, I guess I need the entire block now.

Then it got dark and there's still a bit of rubber left and who the hell needs brakes anyway.

Best way to get the inserts out is to remove the pingfuckits and push your bike up a steep hill.  By the time you get to the top ready for the glorious descent, they'll inevitably have fallen out (DAHIKT).
Title: Re: CycleScheme remove £1,000 price cap
Post by: robgul on November 01, 2019, 08:22:53 pm
Oh, I sort of know what I'm doing (and I will now disprove this). I change brake blocks all the time because I live in the place with hills. But these are the insert kind, so I bought some inserts and figured, you know, undo the little screws, slide 'em out and Bob's your mother's slightly iffy brother. Except, no, it didn't just slide out. It took a hammer (and yeah, I did them in the direction it said). And I got covered with black stuff to the point I'd have passed for Justin Trudeau at a party. Then the other one, the little allen screw thing was stuck, a bit more juice was applied and anyway, I guess I need the entire block now.

Then it got dark and there's still a bit of rubber left and who the hell needs brakes anyway.

Best way to get the inserts out is to remove the pingfuckits and push your bike up a steep hill.  By the time you get to the top ready for the glorious descent, they'll inevitably have fallen out (DAHIKT).

... and on a more practical note: smear the new inserts with washing-up liquid that acts as a lube .. and, as they say, it slides in easily  :thumbsup:

Rob
Title: Re: CycleScheme remove £1,000 price cap
Post by: Jurek on November 01, 2019, 08:37:05 pm
It's a somewhat bigger 'discount' if you're a higher rate taxpayer.

I'm not sure I'd buy a new one each year though, this one (actually my wife's) is about five years old, but has only been extensively ridden for commuting this year. Needs some new brake blocks (I did buy some, but my attempt to replace them, well, erm, wasn't successful). That said, I do have a back-up more chunky folder.

Pop round at some point and I'll change your brake blocks for you.

Oh, I sort of know what I'm doing (and I will now disprove this). I change brake blocks all the time because I live in the place with hills. But these are the insert kind, so I bought some inserts and figured, you know, undo the little screws, slide 'em out and Bob's your mother's slightly iffy brother. Except, no, it didn't just slide out. It took a hammer (and yeah, I did them in the direction it said). And I got covered with black stuff to the point I'd have passed for Justin Trudeau at a party. Then the other one, the little allen screw thing was stuck, a bit more juice was applied and anyway, I guess I need the entire block now.

Then it got dark and there's still a bit of rubber left and who the hell needs brakes anyway.
My bold
 ;D
Title: Re: CycleScheme remove £1,000 price cap
Post by: Pickled Onion on November 01, 2019, 09:30:00 pm
My first brompton lasted ten years of daily use before it fell to pieces. Now I'm using cyclescheme, I buy a new Brompton every year, something I would never consider if I were spending "my own" money.

Presumably you sell on the old one? Have you worked out how much this costs you net per year?

It *think* it leaves me with a surplus, not much, enough for a few beers, I'll do the sums later and post back.

Using the figures on the cyclescheme website, it gives total cost £83.33 X 12 + £70 ownership fee = £650. At the end of a year I put on new chain, sprocket and front brake pads = + £31. Sell it on ebay £680. Total cost of ownership = £1 per year.

Using figures from my actual payslip and HMRC website, it turns into negative cost.

Basically, it means I have a free bike that's always less than a year old. I do 3,000 km a year on the Brompton.
Title: Re: CycleScheme remove £1,000 price cap
Post by: grams on November 01, 2019, 09:36:41 pm
What happens about your ownership fee (https://help.cyclescheme.co.uk/article/42-what-is-an-ownership-fee)?

And more generally (and you might not know or care about this), if you're only paying £680 in, who's paying the rest? How much does Brompton/the bike shop get?
Title: Re: CycleScheme remove £1,000 price cap
Post by: ian on November 01, 2019, 09:56:14 pm
I just choose the own-it-later thing, there was a teeny payment.

The shop gets the full purchase price. You save via income tax. HMRC is effectively paying the difference.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Pickled Onion on November 02, 2019, 01:59:53 pm
What happens about your ownership fee (https://help.cyclescheme.co.uk/article/42-what-is-an-ownership-fee)?
It's £70, I included that in the calculation. What happens to it? It goes to cyclescheme, it's effectively part of the cost of the credit.

Quote
And more generally (and you might not know or care about this), if you're only paying £680 in, who's paying the rest? How much does Brompton/the bike shop get?

Yes, I do care. It works like this: I give the bike shop a voucher for the full price £1000. Cyclescheme gives them the money (I don't know if they have to give a kickback/discount to cyclescheme). The full amount is then deducted from payroll - £1000 is given to cyclescheme. It's deducted before tax & NI, so I have to earn £1000 before tax to pay for the bike. If I paid for it after tax I'd have to earn £1730 to have £1000 in my pocket to pay for the bike.

So, HMRC are getting roughly £420 a year less than if I didn't cycle to work. So yes, this is tax avoidance. But it's not a clever rip-off-HMRC scheme exploiting a loophole, it was deliberately set up by the government as a way of encouraging people to buy bikes to cycle to work on.

Some people might say the £420 might be better spent on schools and hospitals, but these are the rules. And as Cudz pointed out earlier, it helps the bike shop, it helps Brompton, and it enables someone else to get a year-old Brompton at a price they can afford. I don't feel guilty. Alternatively I could commute by car.
Title: Re: CycleScheme remove £1,000 price cap
Post by: robgul on November 02, 2019, 03:19:24 pm
What happens about your ownership fee (https://help.cyclescheme.co.uk/article/42-what-is-an-ownership-fee)?
It's £70, I included that in the calculation. What happens to it? It goes to cyclescheme, it's effectively part of the cost of the credit.

Quote
And more generally (and you might not know or care about this), if you're only paying £680 in, who's paying the rest? How much does Brompton/the bike shop get?

Yes, I do care. It works like this: I give the bike shop a voucher for the full price £1000. Cyclescheme gives them the money (I don't know if they have to give a kickback/discount to cyclescheme). The full amount is then deducted from payroll - £1000 is given to cyclescheme. It's deducted before tax & NI, so I have to earn £1000 before tax to pay for the bike. If I paid for it after tax I'd have to earn £1730 to have £1000 in my pocket to pay for the bike.

So, HMRC are getting roughly £420 a year less than if I didn't cycle to work. So yes, this is tax avoidance. But it's not a clever rip-off-HMRC scheme exploiting a loophole, it was deliberately set up by the government as a way of encouraging people to buy bikes to cycle to work on.

Some people might say the £420 might be better spent on schools and hospitals, but these are the rules. And as Cudz pointed out earlier, it helps the bike shop, it helps Brompton, and it enables someone else to get a year-old Brompton at a price they can afford. I don't feel guilty. Alternatively I could commute by car.

Cyclescheme is 10% on bikes and 15% on accesories - Halfords scheme (via non-Halfords shops) is 15% on bikes .

Rob
Title: Re: CycleScheme remove £1,000 price cap
Post by: Pickled Onion on November 02, 2019, 06:58:08 pm

Cyclescheme is 10% on bikes and 15% on accesories - Halfords scheme (via non-Halfords shops) is 15% on bikes .

Rob

So they are making 10% + the 16.6% VAT at the start, plus 7% transfer fee at maturity. Not bad return for a one year amortising loan with virtually zero risk!
Title: Re: CycleScheme remove £1,000 price cap
Post by: rogerzilla on November 03, 2019, 07:49:08 am
HMRC is effectively paying the difference.
I'm going to sound like one of those unpleasant nutters from the Taxpayers' Alliance, but it's actually paid for by everyone's else's taxes, of course.  Effectively it's a massive public subsidy for bike retailers and manufacturers.  Brompton have done extremely well out of it.
Title: Re: CycleScheme remove £1,000 price cap
Post by: DuncanM on November 03, 2019, 07:57:47 am
If we're splitting hairs, it isn't paid for by everyone else's taxes. It's paid for by you, it's just that things that would normally be paid for by your tax aren't (and those things might be paid for by taxes on everyone else).
Are bikes VATable? If so, then you're paying 20% tax on the bike anyway - if it means you buy a bike where you would have otherwise sat on the cash (or spent it on something non VATable), then HMRC isn't out by much...
Title: Re: CycleScheme remove £1,000 price cap
Post by: Pickled Onion on November 03, 2019, 08:19:09 am
HMRC is effectively paying the difference.
I'm going to sound like one of those unpleasant nutters from the Taxpayers' Alliance, but it's actually paid for by everyone's else's taxes, of course.  Effectively it's a massive public subsidy for bike retailers and manufacturers.  Brompton have done extremely well out of it.

Well, yes, sort of (and we're in danger of straying to pobi). Governments set tax rates on different things for various policy reasons. Is zero VAT on books a subsidy to bookshops and publishers, or a way of getting more people reading? There are low rates of tax on things like children's shoes, museums, pension and ISA savings, people who don't earn much, childcare for working people, etc. and high rates on tobacco and alcohol and higher earners. "Paid for by everyone else's taxes" does not work as an argument unless you think all tax rates should be the same for everyone and everything.
Title: Re: CycleScheme remove £1,000 price cap
Post by: grams on November 03, 2019, 08:36:58 am
My problem with it is that it's only easy to access if you have a stable job, probably white-collar, in a big company, and the further you are from that description the harder it is to access the subsidy. Which is completely the wrong way round.

I view it as a micro-targeted bribe at the potential cycle campaigner demographic to keep them quiet.

"What does the government do for cycling? They give me a shiney new road bike every year!"
Title: Re: CycleScheme remove £1,000 price cap
Post by: robgul on November 03, 2019, 09:08:33 am
If we're splitting hairs, it isn't paid for by everyone else's taxes. It's paid for by you, it's just that things that would normally be paid for by your tax aren't (and those things might be paid for by taxes on everyone else).
Are bikes VATable? If so, then you're paying 20% tax on the bike anyway - if it means you buy a bike where you would have otherwise sat on the cash (or spent it on something non VATable), then HMRC isn't out by much...

Yep - VAT at 20%

Rob

Edit for (possible clarity?) - this is from a transaction I did in the shop last week:   
Customer "buys" bike with a £1,000 voucher from the scheme (most employers have a couple of options for the loan duration).  We, as the shop, effectively invoice the Cyclescheme for £750 + 20% VAT = £900 and receive that payment immediately - i.e. we have given 10% commission on our sale price of £1,000 that would include VAT, which is normally just RRP (unless we want to get shot of something  O:-)). 
How it works after that with Cyclescheme/the employer and VAT I don't know.

Title: Re: CycleScheme remove £1,000 price cap
Post by: hubner on November 03, 2019, 09:19:12 am
I've always thought the scheme was dubious.

Lots of people are not able to use it, as mentioned.

Yes, the cost of a bike is probably at the bottom of the list of things that put people off from cycling.

As for who pays  for it, it depends which you you look at it. If it's a transaction that generates no tax, eg "essentials" that are VAT exempt, then nobody pays, nobody loses any money.

"Paid for by everyone else's taxes" is along the lines of "I pay for all the scrougers' benefits".

Title: Re: CycleScheme remove £1,000 price cap
Post by: Pickled Onion on November 03, 2019, 11:16:03 am

Cyclescheme is 10% on bikes and 15% on accesories - Halfords scheme (via non-Halfords shops) is 15% on bikes .

Rob

So they are making 10% + the 16.6% VAT at the start, plus 7% transfer fee at maturity. Not bad return for a one year amortising loan with virtually zero risk!

Correction:

Having done a bit more research into this, actually cyclescheme can't reclaim the VAT as they are a financial services company. So it's "only" 17% on an amortising 1 year loan, giving roughly 30-40% APR return. They are the ones making the most money out of this. It's a shame virtually no employers will run cycle purchase in-house.

My problem with it is that it's only easy to access if you have a stable job, probably white-collar, in a big company, and the further you are from that description the harder it is to access the subsidy. Which is completely the wrong way round.

That's not the fault of the scheme, any employer can sign up to the scheme if they choose to. The same can be said of a whole host of other things employers do or don't do for their employees.

Quote
I view it as a micro-targeted bribe at the potential cycle campaigner demographic to keep them quiet.

It didn't start as such. It appeared many years ago, long before cyclescheme, buried in an initiative called Green Travel Plans which included a lot of things aimed at getting employers to consider how their employees travelled to and in work and what could be done to reduce the environmental impact. Does anyone really care that much about cycle campaigners?
Title: Re: CycleScheme remove £1,000 price cap
Post by: Pickled Onion on November 03, 2019, 11:18:52 am
Are bikes VATable? If so, then you're paying 20% tax on the bike anyway - if it means you buy a bike where you would have otherwise sat on the cash (or spent it on something non VATable), then HMRC isn't out by much...

Actually, if the employer is VAT registered they can reclaim the VAT. Whether they pass that on to the employee is up to them.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Paul H on November 03, 2019, 12:20:24 pm
So they are making 10% + the 16.6% VAT at the start, plus 7% transfer fee at maturity. Not bad return for a one year amortising loan with virtually zero risk!
I thought it was the employer's money and they can reclaim the VAT.  The schemes profit comes just from the admin. 
Title: Re: CycleScheme remove £1,000 price cap
Post by: Paul H on November 03, 2019, 12:25:11 pm
My problem with it is that it's only easy to access if you have a stable job, probably white-collar, in a big company, and the further you are from that description the harder it is to access the subsidy. Which is completely the wrong way round.
There's also a requirement, though not always followed, that an employer has to offer a bike scheme to all employees.  So those not eligible for salary sacrifice due to low earning must be offered an alternative.  Of course, there's no profit for anyone in the alternatives, so the regulation seems to be either ignored or the employer doesn't offer it to anyone.
Title: Re: CycleScheme remove £1,000 price cap
Post by: ian on November 03, 2019, 12:46:38 pm
HMRC is effectively paying the difference.
I'm going to sound like one of those unpleasant nutters from the Taxpayers' Alliance, but it's actually paid for by everyone's else's taxes, of course.  Effectively it's a massive public subsidy for bike retailers and manufacturers.  Brompton have done extremely well out of it.

Well, it's a modest subsidy compared to the vast amounts governments hand to the automotive industry and drivers. I'd agree that the main beneficiaries are probably people like me but hey, it's there, and it's not like I don't pay lots of tax (HMRC is by far our biggest monthly outgoing). Is it a good way to get people commuting by cycle, I have my doubts, but I'm generally in agreement that anything that gets people out on a bike, even if it's a for an hour at the weekend, is a better thing than not getting them out on a bike.
Title: Re: CycleScheme remove £1,000 price cap
Post by: fuaran on November 03, 2019, 01:02:57 pm
Subsidies (or cheap loans) for bikes are great. But would be much more worthwhile if also available to those on low wages, or temp contracts, or students, or unemployed etc.
And why such a complicated confusing scheme, that is reliant on the employer signing up to it?
Title: Re: CycleScheme remove £1,000 price cap
Post by: ian on November 03, 2019, 01:20:04 pm
I'm sort of surprised (or not) that employers, especially in London where transport costs bite, generally don't seem to offer a 'free' commuting bike as a perk, it's a couple of hundred quid and the employee just pays the tax. Possibly some do, it sounds pretty E5. The cycle scheme does sound excessively complex (and that we periodically debate it is evidence of that).

Ultimately though, if want people to view bicycles as a meaningful transport option, then change is required at a more fundamental level.
Title: Re: CycleScheme remove £1,000 price cap
Post by: quixoticgeek on November 03, 2019, 08:15:51 pm
Subsidies (or cheap loans) for bikes are great. But would be much more worthwhile if also available to those on low wages, or temp contracts, or students, or unemployed etc.
And why such a complicated confusing scheme, that is reliant on the employer signing up to it?

This is what always bugged me. You can't use cyclescheme if the total amount you take home, pre tax, but after the "salary sacrifice", would put you below the minimum wage. Meaning people who could benefit from this more than most, those on the lowest income, can't.

I was self employed for many years, and could never get on to the scheme, as it only works if you're an employee.

The scheme is a nice idea, but it's implementation leaves much to be desired.

J
Title: Re: CycleScheme remove £1,000 price cap
Post by: Greenbank on November 03, 2019, 08:54:12 pm
I was self employed for many years, and could never get on to the scheme, as it only works if you're an employee.

Depends on what type of self-employed you are. I know a few friends who did consultancy (through their own personal company) that just bought a bike through their company. That way it just becomes an asset of the company that slowly depreciates, and they can use it as much as they like (and justify to their accountant its purchase for the purpose of commuting to perform the contracting role).
Title: Re: CycleScheme remove £1,000 price cap
Post by: quixoticgeek on November 03, 2019, 09:01:21 pm

Depends on what type of self-employed you are. I know a few friends who did consultancy (through their own personal company) that just bought a bike through their company. That way it just becomes an asset of the company that slowly depreciates, and they can use it as much as they like (and justify to their accountant its purchase for the purpose of commuting to perform the contracting role).

That a) requires you're an LTD b) doesn't take advantage of the tax efficiency of cyclescheme and c) there are tax implications if you buy one as a business vehicle, and then use it for personal use.

J
Title: Re: CycleScheme remove £1,000 price cap
Post by: jsabine on November 03, 2019, 09:29:48 pm

Depends on what type of self-employed you are. I know a few friends who did consultancy (through their own personal company) that just bought a bike through their company. That way it just becomes an asset of the company that slowly depreciates, and they can use it as much as they like (and justify to their accountant its purchase for the purpose of commuting to perform the contracting role).

That a) requires you're an LTD b) doesn't take advantage of the tax efficiency of cyclescheme and c) there are tax implications if you buy one as a business vehicle, and then use it for personal use.

Surely if you're set up as a Ltd company, and especially if you're VAT registered, there are greater tax efficiencies available than through Cyclescheme or equivalent - the purchase will be before tax, and you can reclaim the VAT, where if you go through Cyclescheme you're at the mercy of your employer allowing you to benefit from their VAT saving. Meantime you're paying cash for the bike so may be able to negotiate a discount, and won't have to pay the option to purchase fee at the end.

Equally, HMRC guidance is explicit that there is no tax/NI/BIK liability through lending bikes to employees for commuting, and that as long as this is a substantial part of their use, then there won't be any liability for private use. https://www.gov.uk/expenses-and-benefits-bikes-for-employees

(OK, there's a bit of don't ask, don't tell, coupled with an expectation not to take the piss, but the guidance really couldn't be clearer about not asking questions you might not like the answers to, probably because, as suggested above, a few more dentists on Pinarellos is still a net benefit to the taxpayer.)
Title: Re: CycleScheme remove £1,000 price cap
Post by: quixoticgeek on November 03, 2019, 09:36:20 pm

Surely if you're set up as a Ltd company, and especially if you're VAT registered, there are greater tax efficiencies available than through Cyclescheme or equivalent - the purchase will be before tax, and you can reclaim the VAT, where if you go through Cyclescheme you're at the mercy of your employer allowing you to benefit from their VAT saving. Meantime you're paying cash for the bike so may be able to negotiate a discount, and won't have to pay the option to purchase fee at the end.


And if you're not a LTD?

J
Title: Re: CycleScheme remove £1,000 price cap
Post by: jsabine on November 03, 2019, 09:40:46 pm
I've got absolutely no idea.

Probably in much the same way as a sole trader plumber deals with the BIK liabilities of using their electric drill for private use like putting up some shelves for their mum.

(I was taking at face value your assertion that you needed to be set up as a Ltd company to buy a bike as a contractor, but given your other assertions in the post are, um, differently right, maybe it's worth clarifying why you feel Ltd status would be a prerequisite.)
Title: Re: CycleScheme remove £1,000 price cap
Post by: Greenbank on November 04, 2019, 05:25:01 pm

Surely if you're set up as a Ltd company, and especially if you're VAT registered, there are greater tax efficiencies available than through Cyclescheme or equivalent - the purchase will be before tax, and you can reclaim the VAT, where if you go through Cyclescheme you're at the mercy of your employer allowing you to benefit from their VAT saving. Meantime you're paying cash for the bike so may be able to negotiate a discount, and won't have to pay the option to purchase fee at the end.


And if you're not a LTD?

As I said:-

Depends on what type of self-employed you are.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Jakob W on November 05, 2019, 06:57:40 pm
My understanding is that if you're a self-employed sole trader, then the bike can be claimed as a business expense, but has to be used solely for business purposes (you used to be able to claim mileage for cycles, but that apparently was removed a couple of years ago). My Brompton gets used solely for getting me to to and from clients when I'm freelancing, so I will be putting it (and any servicing bills) through as an expense.
Title: Re: CycleScheme remove £1,000 price cap
Post by: quixoticgeek on November 05, 2019, 06:59:30 pm
My understanding is that if you're a self-employed sole trader, then the bike can be claimed as a business expense, but has to be used solely for business purposes (you used to be able to claim mileage for cycles, but that apparently was removed a couple of years ago). My Brompton gets used solely for getting me to to and from clients when I'm freelancing, so I will be putting it (and any servicing bills) through as an expense.

Exactly. Take one ride to the shops on it, or stop off at the pub on the way home from a client, and it becomes tax liable again. The rules for sole traders are pretty annoying.

J
Title: Re: CycleScheme remove £1,000 price cap
Post by: Jakob W on November 05, 2019, 08:55:21 pm

Exactly. Take one ride to the shops on it, or stop off at the pub on the way home from a client, and it becomes tax liable again. The rules for sole traders are pretty annoying.

J

I agree with you on the annoyance, but in practical terms HMRC have no way of knowing if you occasionally nip down the shops or detour home via the pub. Certainly a Brompton or other commuter folder is 'obviously' (to normal folk - as ever, Audaxers are the exception) a work-type rather than leisure-type bike in the way that a carbon wonder-steed might not be.
Title: Re: CycleScheme remove £1,000 price cap
Post by: fd3 on November 10, 2019, 11:52:30 pm
I'm sort of surprised (or not) that employers, especially in London where transport costs bite, generally don't seem to offer a 'free' commuting bike as a perk, it's a couple of hundred quid and the employee just pays the tax. Possibly some do, it sounds pretty E5. The cycle scheme does sound excessively complex (and that we periodically debate it is evidence of that).

Ultimately though, if want people to view bicycles as a meaningful transport option, then change is required at a more fundamental level.
I suspect it's a liability and perceived risk thing.  If the company loans you a bike they are responsible for maintaining it, the hassle when it gets stolen by newb employee with a poor lock and for said employee being hit by a car (at least that's the worry, hence better off not bothering).
Title: Re: CycleScheme remove £1,000 price cap
Post by: Frank9755 on November 11, 2019, 09:07:54 am
Many of  the above comments are not correct.

Any company can buy a bike and give it to an employee to use to travel to work.  The law does not require that records are kept regarding usage by that employee - essentially you can do what you want with the bike.  That employee could be the Director of a one-person company.   There is also no requirement that the employee pays the company anything back for the bike. 

The other big confusion right through the thread is between Cycle to Work scheme and Cyclescheme

The first is the law under which companies can buy bikes for their employees, subject to certain conditions.
The second is the name of a private company set up to exploit that law, and which has made a lot of money from doing the trivial amount of admin necessary for bikes purchased under the Cycle to Work scheme.  There is no requirement for companies wishing to use the scheme to do so via Cyclescheme, Halfords or any such 'administrator', and saving their 10-15 % commission.

A final confusion is around the £1,000 limit.  There never was  a limit under the Cycle to Work scheme.  The limit was on how much the employer could claim back under salary sacrifice.  There never has been anything to stop your employer buying a £10k Colnago and giving it to you, just they couldn't get you to pay them back for it!

The point that QG makes above about Cycle to Work schemes involving salary sacrifice not being accessible to those on low wages is a very good one.  IMHO, while being favourable to cycling, the way it has been implemented has produced a horrendous scheme which mainly subsidises middle class people to buy bikes they would have bought anyway while doing nothing to help those on low incomes who may well cycle if they could get the same assistance.
Title: Re: CycleScheme remove £1,000 price cap
Post by: DuncanM on November 11, 2019, 09:48:24 am
A final confusion is around the £1,000 limit.  There never was  a limit under the Cycle to Work scheme.  The limit was on how much the employer could claim back under salary sacrifice.  There never has been anything to stop your employer buying a £10k Colnago and giving it to you, just they couldn't get you to pay them back for it!
And that limit was only in place because officially the employer was lending the money to the employee. If the employer had a consumer credit license, then the limit didn't apply.
The recent change actually means that Cyclescheme (or others) can add (some) value is that they are the ones who have to have a consumer credit license, and the employer doesn't need one.

I completely agree with the rest of your post...
Title: Re: CycleScheme remove £1,000 price cap
Post by: ian on November 11, 2019, 12:00:57 pm
I'm sort of surprised (or not) that employers, especially in London where transport costs bite, generally don't seem to offer a 'free' commuting bike as a perk, it's a couple of hundred quid and the employee just pays the tax. Possibly some do, it sounds pretty E5. The cycle scheme does sound excessively complex (and that we periodically debate it is evidence of that).

Ultimately though, if want people to view bicycles as a meaningful transport option, then change is required at a more fundamental level.
I suspect it's a liability and perceived risk thing.  If the company loans you a bike they are responsible for maintaining it, the hassle when it gets stolen by newb employee with a poor lock and for said employee being hit by a car (at least that's the worry, hence better off not bothering).

Not loan, just give, it's a couple of hundred of quid. I presume it's a perk for taxation purposes. I can't see that they'd have any other liabilities provided the bike was serviceable and in good order (and it would be new, so I assume so) when handed over. Back in the day the mothership had money, for instance, they gave me £500 in vouchers for turning up on a regular basis for 10 years, I could have spent it on machine guns and hard drugs.

The entire Cycle-to-Work thing seems an overcomplicated to achieve ultimately litter. Perhaps better than nothing, but it's not really going to move the bar.
Title: Re: CycleScheme remove £1,000 price cap
Post by: Frank9755 on November 11, 2019, 03:51:58 pm
^ Such an arrangement would be entirely compatible with the Cycle to Work scheme!
Title: Re: CycleScheme remove £1,000 price cap
Post by: quixoticgeek on November 11, 2019, 04:17:34 pm
Many of  the above comments are not correct.

Any company can buy a bike and give it to an employee to use to travel to work.  The law does not require that records are kept regarding usage by that employee - essentially you can do what you want with the bike.  That employee could be the Director of a one-person company.   There is also no requirement that the employee pays the company anything back for the bike. 

It's slightly more complicated than that. The taxation implications are where it gets most complicated. Else you'd have a nice little tax loophole of paying your employees in pinarellos instead of a bonus.

Where a sole trader, as opposed to a ltd, is involved, it gets even more complicated. 99 times in 100 you'd get away with what you're suggesting. But if you lose the audit lottery, it can be a problem. Your ideas of acceptable levels of risk may differ from mine.

Quote
The other big confusion right through the thread is between Cycle to Work scheme and Cyclescheme

The first is the law under which companies can buy bikes for their employees, subject to certain conditions.
The second is the name of a private company set up to exploit that law, and which has made a lot of money from doing the trivial amount of admin necessary for bikes purchased under the Cycle to Work scheme.  There is no requirement for companies wishing to use the scheme to do so via Cyclescheme, Halfords or any such 'administrator', and saving their 10-15 % commission.

A final confusion is around the £1,000 limit.  There never was  a limit under the Cycle to Work scheme.  The limit was on how much the employer could claim back under salary sacrifice.  There never has been anything to stop your employer buying a £10k Colnago and giving it to you, just they couldn't get you to pay them back for it!

As it is considered a loan, above £1000, a consumer credit license is required, fine if you already have one cos you're a bank, but a fuckton of extra admin if you are in any other form business. It gave a defacto limit, even the system has no such limit technically imposed.

Quote

The point that QG makes above about Cycle to Work schemes involving salary sacrifice not being accessible to those on low wages is a very good one.  IMHO, while being favourable to cycling, the way it has been implemented has produced a horrendous scheme which mainly subsidises middle class people to buy bikes they would have bought anyway while doing nothing to help those on low incomes who may well cycle if they could get the same assistance.

Agreed.

Makes for an interesting exercise, how would you redesign the system to make it fairer for all, especially those on limited income who could benefit the most.

Something else I saw go on twitter that was interesting, is the employer imposed limit on bike purchase, some employers have a limit of £10k, some £3k2, etc... Some had it as a percentage of your gross annual income. All fine so far. Until you remember the gender pay gap, that and in some companies it's based on your rank within the company, which given that women are massively underrepresented at the higher levels of companies...

Cycle to work scheme is demonstrably not fit for purpose.

J
Title: Re: CycleScheme remove £1,000 price cap
Post by: Frank9755 on November 12, 2019, 06:31:31 am
Many of  the above comments are not correct.

Any company can buy a bike and give it to an employee to use to travel to work.  The law does not require that records are kept regarding usage by that employee - essentially you can do what you want with the bike.  That employee could be the Director of a one-person company.   There is also no requirement that the employee pays the company anything back for the bike. 

It's slightly more complicated than that. The taxation implications are where it gets most complicated. Else you'd have a nice little tax loophole of paying your employees in pinarellos instead of a bonus.


It really isn't a lot more complicated than that. It is a loophole that enables a limited company to avoid any tax when it lends a bike to an employee.  It can't give the bike to the employee but it can lend it with no intention of ever asking for it back. 

I don't think it applies to sole traders.

The law doesn't say that the employer has to charge the employee anything for the loan of the bike.  When they do, that is where the consumer credit licences and salary sacrifice payments and other complications come in.