Cycle to work scheme

Depends on when you did the scheme - it's now 25% of the RRP according to HMRC http://www.cyclescheme.co.uk/employers/employer-updates/hmrc-update (plus VAT apparently)

Where does it say you have to add VAT?

Your employer can also 'give' you the bike after 12 months, which then means you just pay tax on it (20%, so £50).

The stupid part of this is that there's nothing in the rules that dictates that the monthly "rental" payments have to equal the total cost of the bike. A company could charge you £62.50 per month from your gross pay, then the additional £250 at the end of a year and they'd get back the full £1,000 over the period. By charging £83.33 per month, the company will make a profit from you.

There's definitely a rule saying they can't pass on VAT savings, which would imply they have to recover the full amount. Also there can be no right to buy, otherwise it's a hire-purchase and they need a credit license. Or sutin.