Author Topic: CycleScheme remove £1,000 price cap  (Read 2970 times)

Re: CycleScheme remove £1,000 price cap
« Reply #25 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.
Quote from: tiermat
that's not science, it's semantics.

Kim

  • Timelord
Re: CycleScheme remove £1,000 price cap
« Reply #26 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).
Careful, Kim. Your sarcasm's showing...

robgul

  • Cycle:End-to-End webmaster
  • . . cyclist, Cytech accredited
    • Cycle:End-to-End
Re: CycleScheme remove £1,000 price cap
« Reply #27 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

Re: CycleScheme remove £1,000 price cap
« Reply #28 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

Re: CycleScheme remove £1,000 price cap
« Reply #29 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.
Quote from: tiermat
that's not science, it's semantics.

Re: CycleScheme remove £1,000 price cap
« Reply #30 on: November 01, 2019, 09:36:41 pm »
What happens about your 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?

ian

  • fatuously disingenuous
    • The Suburban Survival Guide
Re: CycleScheme remove £1,000 price cap
« Reply #31 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.
!nataS pihsroW

Re: CycleScheme remove £1,000 price cap
« Reply #32 on: November 02, 2019, 01:59:53 pm »
What happens about your 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.
Quote from: tiermat
that's not science, it's semantics.

robgul

  • Cycle:End-to-End webmaster
  • . . cyclist, Cytech accredited
    • Cycle:End-to-End
Re: CycleScheme remove £1,000 price cap
« Reply #33 on: November 02, 2019, 03:19:24 pm »
What happens about your 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

Re: CycleScheme remove £1,000 price cap
« Reply #34 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!
Quote from: tiermat
that's not science, it's semantics.

Re: CycleScheme remove £1,000 price cap
« Reply #35 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.
Never tell me the odds.

Re: CycleScheme remove £1,000 price cap
« Reply #36 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...

Re: CycleScheme remove £1,000 price cap
« Reply #37 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.
Quote from: tiermat
that's not science, it's semantics.

Re: CycleScheme remove £1,000 price cap
« Reply #38 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!"

robgul

  • Cycle:End-to-End webmaster
  • . . cyclist, Cytech accredited
    • Cycle:End-to-End
Re: CycleScheme remove £1,000 price cap
« Reply #39 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.


Re: CycleScheme remove £1,000 price cap
« Reply #40 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".


Re: CycleScheme remove £1,000 price cap
« Reply #41 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?
Quote from: tiermat
that's not science, it's semantics.

Re: CycleScheme remove £1,000 price cap
« Reply #42 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.
Quote from: tiermat
that's not science, it's semantics.

Re: CycleScheme remove £1,000 price cap
« Reply #43 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. 

Re: CycleScheme remove £1,000 price cap
« Reply #44 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.

ian

  • fatuously disingenuous
    • The Suburban Survival Guide
Re: CycleScheme remove £1,000 price cap
« Reply #45 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.
!nataS pihsroW

fuaran

  • rothair gasta
Re: CycleScheme remove £1,000 price cap
« Reply #46 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?

ian

  • fatuously disingenuous
    • The Suburban Survival Guide
Re: CycleScheme remove £1,000 price cap
« Reply #47 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.
!nataS pihsroW

quixoticgeek

  • Mostly Harmless
Re: CycleScheme remove £1,000 price cap
« Reply #48 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
--
Beer, bikes, and backpacking
http://b.42q.eu/

Re: CycleScheme remove £1,000 price cap
« Reply #49 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).
"Yes please" said Squirrel "biscuits are our favourite things."