Cycle to Work Scheme questions

Cycle to Work Scheme questions

Didn't find your answer?

Some questions on Cycle to Work.

Schemes operate on the basis of the employee leasing the bike and then having the option to buy the bike at a used bike value, based on HMRC stipulated percentages. So:

If the lease payments aren't sufficient to cover the full cost of the bike and the optional buy-back value is low (or the employee doesn't take it up) doesn't the employer lose out? Or is it down to the employer claiming the VAT back on the purchase?

Or if the rental payments cover the full cost and the employee takes up the option to buy, doesn't the employee lose out?

Is VAT chargeable on the buy back amount?

Is there a blanket £1,000 limit to the scheme, for reasons of the Consumer Credit licence, or are there ways around this?

How do the schemes that employers can use (rather than running it in house) make their money?! They don't seem to be charging the employer or the employee, so is the retailer supplying the bike having to pay the scheme?

The questions arise as a bike retailer has received marketing about a scheme where there isn't a £1,000 limit (it says specifically no limit and the example is on a £3,000 bike).

The employee salary sacrifice is exactly the cost of the bike divided by 12.

The scheme says there is a buy back option but an employee buy back payment isn't included in the example calculations.

And we can't see where the scheme operator makes a margin!

The scheme marketing material says it's important to understand that xxxx is not a standard C2W scheme.Standard C2W schemes that exceed £1,000 are illegal without FCA approval. XXXX schemes work in a different way and comply fully with all relevant legislation.

Thanks for any advice.

Replies (2)

Please login or register to join the discussion.

avatar
By Wanderer
13th Nov 2015 10:51

Give Rob a ring.

Give Rob a ring, he'll explain it all.

Thanks (0)
avatar
By NDH
13th Nov 2015 11:19

1) Depends on definition of losing out, they might view that cost as worthwhile for employee morale etc. They do have the saving of er's NI as well.

2) If vat is claimed on the bike then they'd need to account for vat on the lease payments.

3) It's usually through salary sacrifice so the employee gets the tax and NI savings

4) If previously claimed then it would be.

5) No limit on the value of the bike but i believe there is a limit of £1000 for value of the lease payments

6) I assume they run it because it enables them to sell more bikes which is where they make their money.

7) Wouldn't even want to guess what their scheme actually is.

Thanks (1)