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 make another payment to take ownership of the Cyclescheme Package. Without this payment HMRC would class the agreement as hire purchase (rather than hire), and as such the tax exemption would not be available.

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

    1. Under a separate agreement with Cyclescheme, pay a small refundable deposit (3% or 7% of the certificate value*) and continue to use the equipment for 3 years.  The monthly payments during the Extended Use Agreement are zero.  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.
    2. Take ownership of the equipment 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).
    3. Return the equipment to Cyclescheme  

    Cyclescheme’s recommended option is for employees to select option 1.  You can participate in another scheme during this period, as the agreement is directly between yourself and Cyclescheme - the 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 the Extended Use Agreement Cyclescheme will contact you to ascertain if you wish to keep the Cyclescheme Package and become the legal owner.  If you do, Cyclescheme simply retains the deposit as payment, and no further payment is required.

  • How do I make payment?

    How do I make payment?

    The End of Hire payment (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 at the end of your Hire Period, contained within the email is a link to a secure payment portal from which you can make select your preferred End of Hire option and make payment (alternatively you can pay by cheque or by BACS).

  • How is the End of Hire payment calculated?

    How is the End of Hire 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 end of hire process required?

    Why is the end of hire process required?

    In order to benefit from the Income Tax and National Insurance Contributions (NIC) savings, the 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, in which case the tax exemption would not be available.

    To avoid any amount of the Cyclescheme Package becoming taxable any offer of ownership must be a offered as a separate transaction at the end of the 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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