Cycle to Work scheme not working for London, says Labour

But fair play gr0g, you could buy 2.5 tonnes of 4*4 on a novated lease, using pre-tax money to keep the cost down!

For the information of those not in Australia, up until a few years ago you actually got a bigger tax break the further you drove, and so towards the end of the tax year people would be going on road trips just to get their mileage up over their target distance. Eventually even the Australian government of the day decided they didn't really need to encourage people to hasten the death of the planet by driving needlessly, and changed it to a flat rate discount irrespective of mileage.

But you couldn't get a new bike on the same terms though.

Oarsome post their.

reely kewl..

My employer wouldn't do GCI last time I bought a bike - they would only offer CycleScheme. CycleScheme would have saved me a bit of money and about the same for my employer but by far the biggest winner with CycleScheme is CycleScheme themselves - so I didn't bother, I paid cash (and considered changing my job). GCI seems to be the best scheme by far, for employees, employers and for cycle retailers.

I tried to get my employer to use GCI - mainly because they were, I think, the first provider to get themselves authorised so you could exceed the £1,000 limit without your employer being FCA authorised. Employer wasn't interested. They stuck with the Halfords-based scheme, which eventually followed suit and we now have a higher limit.   

And parts, keep those old bikes going.

The take up figures are for the Department for Transport, not TfL.

The system as it's set up requires employer involvement, as the tax breaks are calculated through their payroll systems. Bigger employers should be arsed, as the NI savings they make should outweigh the fairly minor set-up costs [source: many years working in employee benefits including C2W]. Smaller ones may not. 

It could be moved to an employee/HMRC-driven system, as they've done with tax-free childcare. But, that makes it harder for employees to sign up and I doubt HMRC has the resource or inclination for a new system. 

Making bikes zero-rated for VAT would probably be the easiest option, but then government loses the (tenuous) connection of the bikes being an incentive to commute sustainably, and I suspect the Mail et al would make considerable hay out of Pinarellos suddenly becoming £4k cheaper while hard-pressed motorists have to pay for petrol. 

Regarding the VAT approach, one option might be to make the first £500 (or there abouts) of a bike VAT free, with VAT charged on the remainder. So anyone buying a bike for <£500 (which would get you a basic but functional hybrid new) would pay no VAT; anyone buying a bike for more than that would pay some VAT. The VAT on a Pinarello would be £100 lower, which would be substantially harder for the DM to make a big deal over!

I would also add that bikes shouldn't just be about "commuting". I bought a bike through C2W and while I do ride it to the office whenever I go in, that is rarely. So technically I am not following the scheme rules since I far more often ride the bike to the shops, into town etc. - not commuting but still utility journeys (many of which I would probably do by car if I didn't have a bike). 

Correct me if I'm wrong here and I could be out of date but is a lack of uptake with employers also due to:

The need for the business to upfront the cash on behalf of the employee, then claim it back over 12 months. In the unlikely event of 100% uptake then for a business of 50 people that's £100k at £2k per bike.

The 2nd issue is the end of period process. And the 25% charge to own the bike (based on the London job market, people seem to move every year so extension not an option) I think a number of employers fail to administer this, but this does seem to devalue most of the benefit of the scheme.

I think it's the scheme operators who run the end of scheme process I was one of those stung for near the full cost of my bike when I moved jobs 12 months later. 

timmyotool wrote:

Correct me if I'm wrong here and I could be out of date

Mission accepted.

timmyotool wrote:

but is a lack of uptake with employers also due to: The need for the business to upfront the cash on behalf of the employee, then claim it back over 12 months. In the unlikely event of 100% uptake then for a business of 50 people that's £100k at £2k per bike.

Depends on the scheme most offer a finance option where the company can take a loan. I think some only do it this way.

timmyotool wrote:

The 2nd issue is the end of period process. And the 25% charge to own the bike (based on the London job market, people seem to move every year so extension not an option) I think a number of employers fail to administer this, but this does seem to devalue most of the benefit of the scheme.

Again differs according to the scheme, GCI allow 1 year hire term - and regardless of the term chosen, the cost to buy at the end is only £1.

CycleScheme is probably the biggest problem with cycle2work. Most employers look at it and think "we could make a bit of money out of this" and most employees look at it and think "this is pointless the savings are virtually non-existent unless I sign up to stay with my current employer for 3 years, and even then I won't save much".

Thank you for this, interesting stuff. Off to go and research GCI and talk to my employers. I'd assume the 25% was due to benefits in kind and HMRC rules.

The rules for the scheme can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

The residual value of a bike at the end of a period is set out in Annex C. After 1 year, the residual value of a bike with a retail price of £500+ is 25% of its retail price. After 6 years, it is "negligible" (so often treated as £1). GCI allow employees to take an "extended loan" option for up to six years.

This is certainly one area where all the schemes play a bit fast and loose with the rules - with GCI you don't technically own the bike until the end of the extended loan period, but there is practically nothing to stop you changing jobs, moving house, selling the bike etc. in those six years. To all extents and purposes, you do own the bike. 

There is also a line in the Rules that "It is important therefore that the employee is not given any expectation at the outset that they may be entitled to buy the cycle outright." and yet every single scheme makes it clear that at the end of the "loan" period you will be able to buy the bike for its residual value. 

EddyBerckx wrote:

This is BS, I know of a fair few people other than myself who have used it multiple times in that time period. The data is blatantly wrong

I think so too. I've used it twice in that time as have many of my colleagues. 

There are multiple providers so maybe they just looked at one that few companies use?

It is popular 

The article is poorly worded in a couple of places, but the 242 figure appears to refer to applications from the Department for Transport's London based employees. 

Without any further context, that is pretty useless information. 

And without confirming the total number of London based employees at Dept for Transport the number is still meaningless. It could actually be a higher %age than comparable organisations for all we know.

The article has been edited since it was first published. The original piece suggested there had been only 242 applications in five years for London-based workers, full stop, hence all the incredulous comments here.

Presumably the author has since confirmed that the figures refer just to DfT employees as I speculated below.   

Although a number of the incredulous comments kept appearing after it had been amended. Good to know I'm not the only one who sometimes just skips the article and goes straight to the comments.