Who are Cyclescheme?
Cyclescheme is the UK’s number one administrator for the Government's Green Transport Plan Initiative aimed at encouraging employees to cycle to work, thereby reducing air pollution and improving their general health. The scheme allows employees to benefit from a long-term loan of a bicycle and safety equipment completely tax-free. Cyclescheme offers the most admin-friendly scheme for employers.
Employer Benefits
- Fitter, healthier and more productive staff
- Healthy staff are less likely to be absent through stress or illness
- Savings on employers NI contributions (up to 12%)
- Reduce your business carbon footprint
- Cycling to work reduces congestion and demand for parking
- Scheme is an attractive benefit for employees
- Your company will be registered with Green Achiever and will be listed in the Green Achiever Business Directory
Employee Benefits
- Save up to 50% on the cost of a new bike and equipment
- Cost is spread over 12 monthly interest free payments
- Save money on travelling costs
- Reduce your carbon footprint
- Lose weight and tone up
- Improve your general health and well-being
- Improve mental health and help reduce stress levels
- Look good, feel great, save money and help save the planet!
What's the process of getting a tax-free electric bike for work through Cyclescheme?
Step 1. Once an employer has entered into a contract with Cyclescheme (employers can sign up via the website) any employees wishing to participate need to Spencer Ivy to choose the electric bike and, if required, safety equipment.
Step 2. Employees then apply for a Cyclescheme Certificate by finding out their Cyclescheme Employer Code and entering the information provided by Spencer Ivy online. The employee will usually sign an online Hire Agreement at this time.
Step 3. If the employer approves their application they will countersign the Hire Agreement and pay Cyclescheme for the full retail price of the bike and equipment.
Step 4. Cyclescheme will then issue a Certificate to either the employee or the employer, wherever is requested.
Step 5. The Certificate is then redeemed with Spencer Ivy and exchanged for the electric bike package. Salary sacrifice then commences over the hire period (usually 12 months).
Step 6. At the end of the hire period the owner of the bike may choose to offer the employee ownership of the bike for a full market value.
Who can participate in the scheme?
There is no minimum or maximum company size necessary to sign up to the
scheme. Eligible employees must: be paying PAYE, earn more than the National
Minimum Wage after salary sacrifice, and have a contract that does not end during
the hire period. Employees who earn close to the National Minimum Wage following
salary sacrifice may wish to discuss with their employer the option of loan or pool
bikes. There is no credit check for employees wishing to participate.
Under 18s can join the scheme if their guardian signs a guarantor agreement.
What is salary sacrifice and how are savings made?
Salary sacrifice occurs when an employee agrees to give up part of their salary for an agreed period (in the case of the Cycle to Work scheme this is usually 12 months) in exchange for some kind of non-cash benefit, such as the loan of a bicycle and safety equipment, As salary sacrifice is taken from the gross salary (before tax) rather than net pay it means the employee pays less income tax and National Insurance.
Employers that can reclaim VAT usually pass this saving on to their employees, which increases savings further. Employers also save on Secondary Class NICs (usually around 12.8%) as the amount they’re paying in wages is also lower. See www.hmrc.gov.uk/specialist/salary_sacrifice.pdf for a more detailed explanation.
What are the savings?
Typical savings are between 40% and 50%, but the actual amount depends on the employee’s personal tax band and the way the employer runs their scheme. Higher rate taxpayers will save more, employees whose company cannot reclaim VAT (the NHS, for example) will save less. If the employer uses external finance (i.e. borrows the money to buy the bikes from an outside agent) then savings will be approximately 5% lower.
Who actually owns the electric bike?
The bike and goods remain the property of the employer throughout the hire period, unless the employer uses a finance company to fund the bikes; in this case the finance company or funding bank will own the bikes.
Who is responsible for maintaining the electric bike and what happens if it is stolen?
It is the employee’s responsibility to maintain the bike. Spencer Ivy will be able to advise about maintenance and servicing depending on how the bike is used. If the bike is stolen the employee will be liable for any outstanding monies without any tax exemptions, so it's very important that employees insure the bikes. Safety equipment including Home Office-approved 'Sold Secure' D-locks and cable locks can be obtained as part of the scheme, which are available through the Spencer Ivy bike accessories shop.
Does the electric bike have to be used for commuting?
Employees should use the electric bike mainly for commuting to and, if relevant, between work places (at least 50% of the bike’s use should be for work purposes). However, the electric bicycle can also be used for non-work purposes and there is no need for employers to monitor individual usage or for employees to keep a mileage log. Please note that employees can not claim business mileage allowance with a bike obtained under the scheme as the bike belongs to the employer.
What happens at the end of the hire period?
At the end of the hire period employees may be given the opportunity to buy the electric bike for a full market value, however this cannot be an automatic entitlement. The cost of full market value cannot be stated before or during the hire period as this could be considered a benefit in kind and therefore not be eligible for tax benefits. Many employers opt for Cyclescheme to take ownership of the bikes at the end of the hire term, in which case any offer sale to the employee will come directly from Cyclescheme.
What happens if an employee leaves their job or is made redundant?
Once signed, the Hire Agreement is non-cancellable following a cooling-off period of 7 working days following collection of the goods. This means that if an employee leaves or is made redundant from their employment during the hire period they are obliged to pay the remaining salary sacrifice amount in full from net pay i.e. without any tax exemptions.
