End of Hire

The end of hire process, explained.

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  • What happens at the end of the Hire Period?

    What happens at the end of the Hire Period?

    At the end of your hire period you must choose an ownership option and, if applicable, make another payment to take ownership of your Cyclescheme Package. Without this payment HMRC would class the agreement as hire purchase, rather than hire, and as a the tax exemption would not be available.

    If Cyclescheme is handling your ownership options, you will be given the following 3 options at the end of your hire period:

    1. Own it now - Take ownership of your package by paying Cyclescheme the market value (e.g. for a one year old package this would be 18% or 25%* of the Certificate value in accordance with HMRC requirements).
    2. Own it later – Enter into an Extended Use Agreement with Cyclescheme. You pay a small refundable deposit (either 3% or 7% of your certificate value*) and continue to use the equipment for 3 years. No further regular salary payments are required during this time. At the end of this period, Cyclescheme refunds the deposit if you do not wish to keep the package. No further action or payment is required if you wish to keep the equipment.
    3. Return - Return the package to Cyclescheme at your own cost.

    Cyclescheme recommends option 2. This allows you to participate in another scheme during this period, as the agreement is directly between yourself and Cyclescheme - your employer does nothing more.

    * The lower figure is for a certificate value of less than £500 and the higher one for a certificate value of £500 or more. These figures include VAT.

    To view a guide to Cyclescheme’s easy End of Hire process please click here

  • What happens at the end of the Extended Use Agreement?

    What happens at the end of the Extended Use Agreement?

    At the end of your Extended Use Agreement, Cyclescheme will contact you and ask if you would like to keep your Cyclescheme package and become the legal owner. If you do, Cyclescheme will retains your 3% or 7% fee and no further payment is required.

  • How do I make payment?

    How do I make payment?

    The Ownership Fee (either the Market Value or Extended Use Agreement) is a separate transaction to the Hire Period, and as such cannot be taken from your salary.

    Cyclescheme will contact you by email or letter at the end of your Hire Period. This will contain a link to a secure payment portal from which you can select your preferred ownership option and make any payment required (alternatively you can pay by cheque or by BACS).

  • How is the Ownership payment calculated?

    How is the Ownership payment calculated?

    HMRC has published the following ‘Valuation Table’ to be used to calculate the market value of bikes and accessories at the end of the Hire Period.

    Cyclescheme has chosen the best option for the employee. The market value is calculated as below:

    Figure to which market value is applied = (Equipment value - Helmet value) - VAT

    The appropriate Valuation Table percentage is then applied to this amount, and VAT is added back on.

    Here’s an example based on an equipment value of £550 including a £30 Helmet:

    Figure to which market value is applied = (£550 - £30) = £520.00 - VAT = £433.34

    £433.34 is less than £500, therefore;

    12 month valuation percentage = 18%

    4 year valuation percentage = 3%

    4 year valuation = 433.34 * 3% = £13.00 + VAT = £15.60

  • Why is the Ownership process required?

    Why is the Ownership process required?

    In order to benefit from Income Tax and National Insurance Contributions (NIC) savings, the Hire Agreement you enter into with your employer must be for the hire of the equipment only. If the agreement allows for ownership to pass to you automatically, this would result in the agreement being classed as a Hire Purchase Agreement and a tax exemption would not be available.

    To avoid your Cyclescheme package becoming taxable; any offer of ownership must be conducted as a separate transaction at the end of your hire period.

    Cyclescheme can provide employers with a solution that maximises participants savings, to view this in more detail, please see "What happens at the end of the Hire Period"

  • Can't find what you are looking for?

    Can't find what you are looking for?

    If you are unable to find the answer to your question, please get in touch with us using the contact details which can be found here.

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