With petrol prices soaring and train fares continuing to rise, you could save yourself hundreds of pounds a year by ditching your traditional commute in favour of cycling, reckons Marc Lockley in The Observer. And with summer here, now’s the perfect time to start.
The average bike costs over £200 but the good news is this can easily be reduced.
Cutting the cost of a bike
One way to cut your initial outlay is through the government’s Cycle to Work scheme. If your employer has joined you can save up to 50% on the cost of a bike. You choose one from an approved supplier and your employer buys it for you and reclaims the VAT. You then lease the bike back from your employer, paying equal instalments of the VAT-free price over up to 18 months. And because these payments are taken from your salary before tax is deducted you benefit from income tax and national insurance (NIC) savings. Here’s how it works.
You choose a flash bike worth say £450. Your employer then buys it and reclaims the 15% VAT meaning the bike costs your employer £391.30 (450/1.15). You then pay your employer £21.73 over 18 months. But the effective cost to you, assuming basic-rate tax at 20% and NICs at 11%, is just £14.99, says Melanie Wright in The Sunday Telegraph. After 18-months your employer will offer to sell the bike to you at a ‘fair market price’. This is usually around 5% of the original price, so in this case £22.50. Overall you will have bought a £450 bike for £292.32 ((18 x £14.99) + £22.50) a saving of around 35%.
To get an idea of how much you could save, try the calculators at Bike Dock or Evans.
Self-employed, or your employer isn’t part of the scheme?
If you can’t use the Cycle to Work scheme then you can still pick up a cheap bike. One way is to buy second-hand from websites such as Gumtree or eBay. You might even be able to get one for free from Freecycle. Before you start shopping around, work out what type of bike you want using Why Cycle? which offers impartial advice on the best bike for your needs.
Another place to pick up a cheap bike is at a police auction. Bumblebee Auctions sells off property seized by the police, or handed in with the police unable to find the original owner. When I looked there were bikes for as little as £1. Just be aware that these are second-hand and haven’t been checked, so might not be in tip-top condition. You also need to collect the bicycle from the address given.
Don’t forget insurance…
An estimated 300,000 bikes are stolen each year so make sure you get yours insured. You can usually extend your home contents insurance to include a bike for around £20 a year but the terms on these policies are limited so check them carefully. If your bike is fairly expensive it’s worth getting a specialised insurance policy from companies such as Cycleguard.
Also make sure that your insurance includes third party insurance cover so that if you have a prang that’s your fault or you run someone – or their dog – over you don’t have to cover the costs.
As with all insurance, shop around for the best deal.
Five tips for deterring thieves
Having a new bike stolen is frustrating. Here’s how to protect yours.
1. Lock your bike to something solid with a sturdy D-Lock.
2. If possible store it in a garage, shed or in your house.
3. Mess your bike up. If you can face it, wrap duct tape round the frame. Thieves are looking for bikes they can sell on quickly so make yours less desirable.
4. Remove the saddle when you leave your bike.
5. Remove the front wheel too – it’s fairly easily done and an effective deterrent but it does mean carrying the wheel away. Otherwise make sure both wheels are locked to the bike frame, as thieves are often happy to just steal the wheels even if the frame is secured.
• This article is taken from our weekly MoneyWeek Saver email.
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