Cycle to Work schemes: are they dead in the water?
Our new coalition government, playfully nicknamed the ConDems by some wag, has been at it again: the military can expect to have to pay for their own pea-shooters; a new generation of infants are to have their milked snatched; and more recently drug addicts and alcoholics have felt threatened by a consultation paper that asks whether they should have their welfare benefits withdrawn if they don't pull themselves together. Or at least seek help.
The cheque's in the post. A final payment and ownership of the Ridgeback will pass to me.
So it seems unlikely that there will be much sympathy for cyclists who have hitherto been able to receive up to 50% discount on the price of a new bike (and take a year or longer to pay for it). A recent 'clarification' of the rules has meant that instead of the final payment being around 5% of the 'fair market value' at the end of the loan scheme (usually a period of one year), HMRC is suggesting that figure should be 25% – unless there are good reasons. It's all still a bit unclear, though, as these suggestions are still guidelines, so no doubt there will be someone, somewhere trying to find ways around this increased final payment. After all, as well as cyclists benefiting from this incentive there has been a fair bit of money made by organisations set up to administer the various schemes. It's in their interest to allow things to carry on.
The pros and cons of Cycle to Work schemes, in light of these guidelines, have been well rehearsed elsewhere. For all sorts of reasons I won't be getting another C2W bike this year. However, I think there is one pro that remains: the cyclist takes at least a year to pay for their bike. A con I don't recall reading about is that older riders may find their final salary pensions affected.
Anyway, I'm glad I filled in the form last summer. After a gap of far too many years it has helped me to get back in to cycling again, and I'm grateful for that.
My Cyclesheme bike last Monday. Not on the commute to work.
Mrs Taylor distributes and collects Barnardo's envelopes in our road and the area round about. It's quite an eye-opener – who gives and who doesn't (and which well-off people fill the envelope with useless copper). Anyway, the woman who lives at one of the well-off houses – a Barnardo's non-giver – was boasting a while back how she managed to get money off her new bike through the Cycle to Work scheme and how she's no intention of going to work on it. As a cycling taxpaying husband of a charity collector, I don't quite know what to make of this. I think I'd feel better if she actually rode the bike, if only for leisure, but she doesn't.
I suppose something that genuinely helps people cycle to work must be a good thing. I don't know much about the scheme itself.
August 23rd, 2010 at 9:26 am
It's a great scheme that helps people get back to cycling – although personally of the three people I know who used the scheme, they all carried on driving/bussing to work and only used the bikes at weekends!
I always wondered, though – if you're working, a bike is probably the most affordable means of transport available, yet the government helps you buy it. If you're unemployed/retired, with a severely limited income, and would like to use a bike for looking for work, shopping, or just helping you get about and stay fit, you have to find the whole cost yourself, which can be difficult.
Surely a similar scheme could have been thought up for the unsalaried/unwaged?
August 23rd, 2010 at 9:59 am
Very good points Mike. And last March, through the £2000 scrappage scheme, the government helped me buy a new car. The thing is, the car is German built in Spain. It makes no sense but the scheme is there so you take advantage of it.
Yes, that says a lot about what the better-off are in for; 'better-off' as in not just financially but deemed capable of self help.
[added] Out of curiosity I've now read the Cycle to Work Scheme implementation guidance PDF from the Department for Transport. I find it quite hard to understand, especially the pensions implications of Salary Sacrifice. It also says: "Employees are not expected to keep mileage logs but employers should make clear to them that if they do not use the cycle mainly for qualifying journeys, they may lose the benefit of the tax exemption," a qualifying journey being cycling to or from work, or a cycling journey at work. It seems it's up to employers to police the scheme.
As far as the organisations who administer the schemes go, no-one is safe! Administrative bodies are being scrapped left, right, and centre.
[more added after further reading on a wet afternoon] In the current financial environment it isn't surprising the Revenue isn't happy with the value of a 12 month old bicycle being written down to 5% of the original price. A more realistic 25% makes the benefit too marginal. So (as a newcomer to the Cycle to Work scheme) I agree with 'dead in the water'.
August 23rd, 2010 at 10:08 am
I haven't worked out how much I've actually paid for the bike as the amount deducted each month was before stoppages and I can't find the original bill so I don't know how much I've saved.
Anyway, I reckon I travelled to work at least 95% of the time on my Ridgeback last year, so whatever else might be said about the virtues of C2W schemes my conscience is clear
August 23rd, 2010 at 10:25 pm
Whatever the reason Chris, I'm pleased you're now back into cycling.
August 23rd, 2010 at 10:36 pm
Hi All,
just got my final payment detail from my employer and they want 25% of the voucher fee of £850 even though £250 of this was for clothing. Which ever way you look at it I have paid the full value of the bike less tax and NI so it seems well harsh. Their seems little flexibility either. A cheaper route is pay 5% and then pay tax on the difference of the 25% but no interest, I'm afraid the thought of the guide lines and £25k in the company pot to appealing to save employees some cash?
It has been so poorly organised they have no detail of what bike or clothing so am afraid they may be getting a Raleigh Grifter returned collected at their convenience.
You would think the second biggest water company would look after its employees better?
September 9th, 2010 at 10:05 am
My employers are are bunch of con artists. I bought my bike priced at £800 on the BTW 18 months ago and have been paying £20.51 a fortnight. With the tax and NI savings it means I have paid approx £640 for the bike. I have just got my letter through saying I have 3 options under the scheme – a) Keep the bike and pay a final value of £168 + Vat of £29.40 (which will mean I have paid £837 for the bike (Oh – and the £198 comes straight off one pay)), b) pay 5% pf the value (£40) and give the bike back, or c) stop paying at the end of the scheme but the bike still belongs to them for another 5 years!
Moral here – don't trust the local council on a salary sacrifice scheme – I could have bought the bike outright elsewhere for much less in the first place!
November 11th, 2010 at 7:00 pm
Sean, if you haven't already I should ask your payroll people to look at those figures again. Even with the recent 'guidelines' issued by HMRC there is no way you should be worse off than if you bought the bike outright.
November 14th, 2010 at 9:34 pm