Cycle to Work scheme payments to be VATable from next year

I have used the scheme, but decided not to do so again. The pretty marginal savings do not offset the hastle of not owning your bike, and of technically not being sure wether you'll be offered it at the end of the hire period by cyclescheme.
There are all sorts of hidden costs. Insurance has already been mentioned. There is also the fact that for a £1000 cyclescheme voucher, the bike shop actually only gets £900, and naturally passes this cost on to the buyer. My shop was quite upfront telling me that he'd sell me the bike for £100 less if I didn't use the voucher!

On the plus side, if you earn between 100k and 113.5k, you can actually save nearly 70%, as the marginal rate of taxation there is 62%.

I got a Pashley Roadster BSO on cyclescheme way before the changes (all the savings I made paid for the numerous repairs on the piece of sh*t) and was considering doing it again and buying a proper bike when the HMRC threw their toys out of the pram. The EU aren't the real villains, it's the HMRC who have been doing their level best to kill this all off from the outset.

It remains a simple way to buy at a good price (because of the income tax effect) and with salary sacrifice deductions it's a painless way to pay for a better bike than you would normally buy.

Extended mine by 30 months for a refundable £58. I'm guessing that this will be the bike's value at the end of the hire period, so I either hand it back for the refund, or keep it for free? As a higher rate tax payer it was originally a very attractive proposition...not sure I'd go for it again though. The cost of additional insurance over the full term of the hire wipes out quite a bit of the saving. As said previously, possibly better to go for a private EOL deal with interest free finance over 12 months.

Thank you Europe, once again, for nothing.

It does appear that the savings we all thought we were making are slowly being taken away from us. I simply do not understand our govt! The idea behind the scheme get more people on bikes, cheaper, healthier, less traffic congestion, the list goes on. But on the other hand scare everyone away from the scheme. My cycle to work scheme I signed up for finishes in a couple of months time I was thinking of extending it over the new rules or paying it off and going for another bike! I think now I will pay off the bike so I own it and pay for my next bike with my own money. At least it won't be subject to changes 6 months down the road...

A 7% payment at the death - where do you get that from? I've been told it could be 25% unless I can persuade my employer to extend the hire period. HMRC have wrecked the scheme and this latest ruling will mean even fewer taking advantage as savings will be minimal.

And if you do take out the cycle to work scheme, make sure you take out separate insurance for the bike, I've heard of people spending the best part of a grand on a bike, having it nicked and then being stuck with making the repayments and in a final kick in the nuts having to make the final payment in order to "own" the bike as they cant return it.

Some home insurances wont cover cycle to work schemes as the bike isnt your property.

I must be misunderstanding - but if the VAT is payable on the gross payments, then surely that means the VAT is more, not less? 20% of a £100 monthly payment is more than 20% of a £59, post tax and NI payment, no? Or am I looking at it the wrong way round?

As PhilWalker says, the benefits are getting so far eroded that most people would be much better off finding a good deal on a sale bike and buying that....

Yeah, that gets way too complicated here! I wanted to get a new bike on the scheme, but after working out the total gain after a 12 month hire period, it was working out to be ridiculously small for the whole hassle on both me and my company.

There is just no way to justify *not* owning the bike and still have to pay 25% of it's initial value at the end of 12 months.

I had a £1000 voucher, I'm returning it and I'll be the rightful owner of my new bike from day 1.

Cycle scheme? No thanks.
Sad, it *was* attractive

They need to stop mucking about with this.

I've done it once, got burned by the market value changes and dealer (Brixton Cycles) gouging, ended up being the worst value for money bike I've ever bought. Not doing it again.

OK, fine, as long as they also start taxing that much more common and far more valuable "provision of a benefit": staff car parks.

They just can't bear to see good schemes continue... what is next? ask us to repay tax savings back? Im very very cross

The whole thing has turned into a farce now and may as well be scrapped. People are better off finding a good deal and getting the bike on Interest free finance over 12 months or whatever.

Yet again, the Government lets a good thing go to waste

These 'clarifications' meant my employer got bored with the whole thing and wandered off. No more scheme here, despite a high profile Green Agenda marketing campaign. Pfft.

Jesus, they don't like to make it easy do they? What started out as an excellent scheme to help people purchase a bike to use for commuting (well at least 50% commuting ;-)) has turned into a right ball-ache!

In some ways I'm almost glad that my employer hasn't signed up for this as it's the savings are fast disappearing in a pile of red tape!