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Salary Sacrifice bike schemes. Swizz! Or not?

iSleepDiagonal

Posted by iSleepDiagonal about 1 year ago
Last active about 1 year ago 7 responses

My company has offered us the chance to get a bike paid for out of pre-tax salary, straight from the paycheque. Tax benefits, apparently. The cost is about half of shop price of the bike.

But! It turns out it’s not your bike. It’s the company’s bike. You’re hiring it from them for the specified time period, usually 12 months, and paying monthly instalments.

At the end of the rental period (cost, about half a bike), you have the option to buy the bike at Fair Market Value (their capitailsation). If you don’t want the bike, they will dispose of it for you, for a fee – again, they will charge you FMV to dispose of the bike (to a charity, they say). FMV can’t be disclosed until the end of the

It’s up to you to insure the bike. If you resign, you repay the balance. If it’s stolen, you repay the balance.

And it decreases your monthly groos salary, so employer doesn’t have to pay as much National Insurance. If affects your pension payments too.

Am I being overly cynical? Has anyone been through one of these schemes?

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7 responses

Globesy

ISD

it may depend on your company. we have a small company (40 people) and have just started the scheme.

For our staff – they will own the bike at the end of the period. The FMV thing is a bit of a red herring. Some example numbers:

You buy a bike for £1,000.

The company is invoiced £851 by the bike shop (as no VAT). The Company then pays the amount and recovers it by deducting £71 per month from your salary for a year.

Essentially you have paid the full amount for the bike and it should have no value to teh company. I think its a good scheme – check the evans cycles website for a good guide (under ride2work)

Posted about 1 year ago by Globesy

flippypremium

Worked for me in my last job – the ‘fair market value’ was 20 quid at the end of it all.

Posted about 1 year ago by flippy

mollusk

We’ve just started that as well, but apparently Evans, the bike shop, are really crap.

Posted about 1 year ago by mollusk

logomomo

Why buy a new bike? I bought a Specialized Sirrus off Gumtree for £160 [they’re £700 new]. It’s in good condition but the guy who owned it was moving back to Oz so had to get rid. Honestly, there are some great second hand deals out there and I’m not talking about buying your bike from Brick lane or worse, outside the T-bar on a Sunday, these are high quality, legit bikes.

What’s more, if they get stolen it’s not the end of the world!

Posted about 1 year ago by logomomo

Samgooding

And with ours at least 50% if its use must be for work, love to see them working that one out…

Posted about 1 year ago by Samgooding

Ken-Londonist

“And it decreases your monthly groos salary, so employer doesn’t have to pay as much National Insurance. If affects your pension payments too.”

Re: gross salary reduction: you don’t have to pay as much NI, either. You also don’t have to pay as much income tax.

Re: pension payments: you should double-check that. Most places that have salary sacrifice schemes (whether for bikes, laptops, whatever) have a ‘notional salary’ that they use to calculate pension payments, &c.

Posted about 1 year ago by Ken-Londonist

iSleepDiagonal

mollusk: the bit about this scheme that made me happy was that it’s not tied to one chain. There’s a preferred supplier list, and my favourites Moose in Colliers Wood are on it.

Ken – I can’t help thinking it’s all for the employer’s benefit rather than mine. Bah. And I want a new bike to be mine mine mine me memememe rather than “hired” for a year, then it’s still not mine. Pffft.

Posted about 1 year ago by iSleepDiagonal