How (not) to buy a subsidised bicycle

In case you hadn't caught up with this, the UK government has a "Cycle to Work" initiative, which allows workers for those companies who opt in to get tax relief (under a "salary sacrifice" scheme) when they buy a new bike to get themselves to work. The University of Cambridge have indeed just opted in --  and the procedures are currently administered by "Cyclescheme", who describe themselves as "the UK's number one provider of tax-free bikes for the Government's Cycle to Work initiative". (So there are number two and three providers? I found myself wondering -- then discovered Booost and Cycle2work.)

It is, of course, a good idea in principle. Anything that would get cars off the Cambridge roads and more bikes on, would be a great improvement.

But just look at the dreadful palaver that it takes to get one of these things -- and the nasty sting in the tail (namely that the richer employees benefit more from this scheme).

The University's (modishly titled) Human Resources Division has put all the instructions on its website.

First step, apparently, is to visit a participating store, choose your bike and safety equipment up to a maximum of £2000. Get a written quote.

Then go to the Cyclesheme website and request a voucher and fill in the agreement (the University will meanwhile approve your request and eligibility). All being well, Cyclescheme will then post your voucher to you. For this stage of the process, you should allow at least three to four weeks. "It is worth bearing in mind that the University is required to approve the application online, pay an invoice, and then the vouchers are sent by Cyclescheme through the post so average turnaround is around 3–4 weeks from applying online to receiving a voucher", as the university website disconcertingly confesses. By this time my new found enthusiasm might have been beginning to wane.

It's then back to the shop, with the voucher to pick up the equipment (which they have been obligingly keeping for you for the last month or so -- how many bets they now have to reorder/wait for new stick). And cost is deducted from your gross salary, before tax, in ten monthly instalments. And hey ho, every one is supposed to be happy -- you have got a cheaper bike, the University (and government) has demonstrated its commitment to the health of its workforce,  the local bike shops have increased trade as have, incidentally, the foreign bike-makers who have made the machines that we hardly make in this country any longer. Presumably somehow Cyclescheme have  also got a percentage (I don't imagine that they are administering this scheme for free).

There are however a few snags, apart from the infernal amount of time it is all going to take between choosing the bike and tootling off down the road on it (unlike when I buy a car, I tend to need a bike quickly).

For a start, you don't actually own the bike, you are only renting it from the University (otherwise it doesn't qualify for the  salary sacrifice scheme). "At the end of the hire period ownership of the bike reverts to Cyclescheme who may choose to give you the option to purchase the equipment", the website explains. Historically, they go on to say, this is about 5% of the original purchase price plus VAT. I can hardly believe that depreciation on bicycles is quite so extreme -- that a £300 bike is worth just £15 after a year? But it certainly seems like a reason for mistreating you Cyclescheme bike, to ensure a low valuation.

But the real downside is the unfairness of the benefits. As this comes off tax, you get more of a saving if you are a higher rate tax payer. So, for example, suppose a member of staff earning £30,000 buys a bike plus safety equipment for £350, they save £102.90 on the total price (just over 29%). If a senior professor or administrator buys the same bike and equipment, they save over £40 more (£143.50, or 41%). How unfair is that? (It reminds me of donations of grain etc in ancient cities -- where the rich who didn't need it often got more that the poor who did . . . it was another mark of status.)

Presumably the whole scheme was invented to get round the tax law on perks, and to prevent people collecting vouchers and selling them on. But surely it wasn't beyond the wit of governmentt to invent a simple voucher distribution, which you just picked up from HR who ticked you off on their list -- and one which gave MORE money not LESS to the low paid.

Besides if we managed to eradicate the Cyclescheme middleman, we could afford a few people being on the fiddle (and even if they were on the fiddle, it would still mean more bikes after all -- which is the real point.

(Thanks here to the husband who first alerted me to the website.)