Cycling to work is being encouraged more than ever, as not only is it better for the environment but it is an alternative to public transport. But what if you don’t have a bike or your bike is past it and you can’t afford a new one? The Cycle to Work Scheme could be just right for you and your employees to help mitigate the cost for all.
The Cycle to Work Scheme is a UK Government tax exemption initiative first introduced back in 1999. Bikes can be expensive and the scheme makes cycling more affordable for employees who need a bike straight away but can’t afford one upfront. The scheme allows employers to loan cycles and cyclists’ safety equipment to employees as a tax free benefit.
The employee effectively hires a new bike without paying anything upfront, usually spread over 12 months and interest free. The employee saves income tax and national insurance by making payments from gross earnings, as a salary sacrifice. When the hire period ends the employee can either choose to:
What’s in it for the employer?
The scheme does not require prior approval of HMRC. The schemes are often provided through a third party who administer the scheme and to avoid the requirement of the employer having to hold an FCA licence if the bikes cost exceeds £1,000. Third party schemes normally operate by the employer buying a voucher from a scheme provider which can be used in participating retailers and the deductions from the employees salary then used to reimburse the employer for the initial outlay.
There is no longer a limit on the value of the cycle, so you can even choose an E- bike.
So why use a Cycle to Work Scheme?
By Denise Harris, Director