Cyclescheme market value FAQs
Information from Cyclescheme.
How is the market value (MV) for a bike obtained through a Cycle to Work scheme now determined?
HMRC has published EIM Updates relating to the sale of cycles after the end of the hire period.
The following ‘Valuation Table’ has been published in EIM21667a and provides a matrix, which can be used to calculate the Market Value (MV) at the end of the hire period, rather than determining the MV on a case-by-case basis:
The valuation table
| Age of cycle |
Acceptable disposal value percentage |
|
|---|---|---|
| Original price of the cycle less than £50 | Original price £500 |
|
| 12 months | 18% |
25% |
| 18 months | 16% |
21% |
| 2 years | 13% |
17% |
| 3 years | 8% |
12% |
| 4 years | 3% |
7% |
Why should I sign the Extended Use Agreement and extend the period of use by a further 31 months?
By extending the period of use, any valuation of the bicycle at the end of this period will be at substantially lower values than those shown in HMRC’s Valuation Table for a bicycle aged 12 months.
Why should I extend the hire period by 31 months?
This extension will take your total continued period of use up to 3 years and 7 months. As a result, the valuation of the cycle can be rounded up to the 4 year (48 months) figures detailed in the Valuation Table.
Why do I need to sign the Extended Use Agreement?
The ‘Extended Use Agreement’ forms the agreement between you and Cyclescheme and details your respective responsibilities during the extended use period.
Will I have to pay any more for the bike during the extended hire period?
You will be asked to pay an upfront ‘Continuation Deposit’ in return for the continued use of the bicycle at the point you sign the Extended Use Agreement. There are no further salary sacrifice payments or hire charges due during the extended use period.
What is a ‘Continuation Deposit’ and why am I required to pay it?
This is an advance ‘consideration’ to be paid to Cyclescheme in return for the continued use of the bicycle for a further 31 months.
What will happen at the end of the 31 month extended use period?
Cyclescheme will contact you to discuss your options. At this point ownership of the bike may be offered to you for a ‘consideration’ in the form of a market value fee, which is equal to the ‘Continuation Deposit’ you have already paid.
Does this mean I have to pay the ‘Continuation Deposit’ and a market value fee?
No. The ‘consideration’ of the fee is offset against the ‘Continuation Deposit’ you have already paid.
What if I don’t want to own or keep the bicycle at the end of the extended use period?
No problem. You will be able to return the bicycle to Cyclescheme and, upon safe receipt ofthe bicycle, Cyclescheme will fully refund your ‘Continuation Deposit’.
Can I participate in a new scheme with my employer whilst the extended use period is running?
Yes, you can. The Extended Use Agreement is not a salary sacrifice arrangement and,apart from the ‘Continuation Deposit’, no further payments are required from you during theextended use period. This leaves you free to participate in future schemes with youremployer. However, you must continue to use the bicycle under the Extended UseAgreement) mainly for commuting journeys to and from work or between workplaces(“commuting”).
What happens if I leave my employment during the extended use period?
The Extended Use Agreement is between you and Cyclescheme, so even if you leave your current job the extended use period will continue to run, subject to continuing to use the bicycle for Commuting. Cyclescheme will contact you at the end of the extended use periodto discuss your options.
What happens if I leave my employment during the initial hire period with my employer?
Upon early termination of your hire agreement, the ownership of the bicycle and safety equipment will transfer to Cyclescheme.
At this point you do not need to do anything; Cyclescheme will contact you to discuss your options at the point where your hire agreement would have ended if you had not left your employment early.
However, if your contact details change during this time you should inform Cyclescheme immediately by emailing us at endofhire@cyclescheme.co.uk.
What if my contact details change during the extended use period?
If your contact details change you should inform Cyclescheme immediately, otherwise we may not be able to contact you at the end of the extended use period. You will be able to update your records using your own ‘my Cyclescheme’ online login details. Alternatively, you can email us at endofhire@cyclescheme.co.uk.
Can I extend the extended use period for longer than 31 months?
No. The option to extend beyond 31 months is not available.
What if my original hire period (with my employer) was not 12 months?
Your extended use period will be calculated to bring the total period of use to 3 years 7 months (43 months). For example, if your initial hire period with your employer was 18 months, the extended use period will be calculated as:
43 months – 18 months = 25 months extended use period.
Who is responsible for the maintenance and upkeep of the bike during the extended use period?
The Extended Use Agreement outlines your responsibilities during the extended use period. You continue to be responsible for the maintenance of the bicycle, and we strongly recommend that you insure the bicycle during the extended use period.
What happens if the bike is lost or stolen during the extended use period?
If the bike is lost or stolen at any point during the extended use period you will be unable to claim your deposit at the end of the extended use period.