Cycle to Work Scheme


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Employer benefits:

    1. Healthier workforce – improved productivity
    2. Improve employee retention
    3. Save money – typically the 13.8% NI contribution on the cost
    4. Claim capital allowances against cost of bikes
    5. Low or zero-cost implemenmtation
    6. Reduce demand for parking spaces
    7. Contributes to corporate social responsibility by reducing carbon footprint
    8. Simple administration
    9. We can come to you and provide marketing materials /roadshow for Employees
    10. With the Podium scheme we also offer your Employees further discounts on a wide range of other sporting equipment

Key elements of Cycle to Work

  • If your cost per Employee limit is no more than £1000 you don’t need a seperate Consumer Credit License. You can elect to raise this limit, though you will need a CCL to do that. Some Employers will already have one for their own business, or may choose to buy one as it offers more scope to Employees in the equipment they can choose. See Office of Fair Trading website for more information
  • You should make clear to Employees that if they do not use the cycle mainly for qualifying journeys, they may lose the benefit of the tax exemption.
  • Your Employee chooses a cycle(s) and equipment up to the £ limit you set
  • You purchase these directly from the cycle retailer
  • Employees hire (NOT hire purchase) the equipment from you over a 12 or 18 month period
  • You recoup the entire cost from your employees over 12/18 months via a Salary Sacrifice
  • There’s a cash flow implication because you pay for the cycle at the start, but you save the 13.8% (up from 12.8% from 2012) National Insurance on the amount of the Salary Sacrifice, so it’s a very good return over the scheme term
  • You can treat the cost as capital expenditure and claim capital allowances in the normal manner
  • Employees save on tax and NI by sacrificing a fixed monthly amount from their gross pay
  • You retain the ownership of the equipment throughout the lease term. After the initial hire period you may agree to transfer title of the cycle to the Employee for ‘fair market value’ (FMV). That can’t be done earlier that 12 months, but it can be delayed for up to 6 years. NOTE that HMRC rules on this topic are clear,  and it’s important they are followed or the scheme may not attract the tax benefit that makes it so attractive.
  • As the cycle remains the property of the Employer throughout the term you may wish to consider insurance. You can elect to take the risk, add it to your own insurance agreement, or make it a condition of the scheme that the Employee adds it to their own house and contents insurance (as long as they advise their insurer that their employer has an interest in the cycle).
  • What equipment is covered by the scheme? Broadly speaking any ‘normal’ bicycle, plus related safety equipment. ‘Safety equipment’ is not clearly defined by HMRC but generally a common sense approach would include:
    • Cycle helmets which conform to European standard EN 1078
    • Bells and bulb horns
    • Lights, including dynamo packs
    • Mirrors and mudguards to ensure riders visibility is not impaired
    • Cycle clips and dress guards
    • Panniers, luggage carriers and straps to allow luggage to be safely carried
    • Child safety seats
    • Locks and chains to ensure cycle can be safely secured
    • Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs
    • Reflective clothing along with white front reflectors and spoke reflectors