The cycle scheme allows employees to hire a bike and associated equipment tax free. Currently just 3% of UK commuters travel by bicycle to work, according to the UK Department of Transport, one of the lowest figures in Europe. The government hopes the cycle scheme, along with other incentives will help get this figure to 40%.
In order to avail of the cycle to work scheme the bicycle and equipment must be purchased by the employer. It is then hired to an employee over a period of time (typically 12-18 months), through salary sacrifice the full cost of the bike and equipment will be paid back to the company over the duration of the hire period. Availing of the cycle scheme means an effective saving of up to 42% on the cost of a new bicycle for a top rate taxpayer.
The employee chooses a bicycle and any associated safety equipment (up to a maximum value of £1,000) and the employer would purchase same on behalf of the employee. The employer will then hire the bike to the employee through a salary sacrifice agreement. At the end of the hire period the employer (the owner of the bike) may choose to offer the employee ownership of the bike for the then market value.
It is not envisaged that there will be a notification process involved, but the purchase of bicycles and associated safety equipment by employers for employees will be subject to the normal Revenue audit procedure with the normal obligations on employers to maintain records.
The Department for Transport Guidance document states: “Eligible equipment includes cycles and cyclists’ safety equipment. The tax exemption defines a “cycle” as ‘a bicycle, a tricycle, or a cycle having four or more wheels, not being in any case a motor vehicle’ (192(1) of the Road Traffic Act 1988 (c.52)). An electrically assisted pedal cycle can be included under the scheme. Cyclists’ safety equipment is not similarly defined in the legislation and a common sense approach should be taken to the equipment provided. This could include:
It is the employer’s choice what safety equipment is offered, but you may wish to confirm with your local tax inspector whether the equipment you provide falls within the tax exemption.”
The scheme came into operation with effect from January 1st, 1999.
There is no limit on the amount of employees in a company that can avail of the cycle scheme provided that the employer agrees to participate. However, the tax exempt benefit in kind can be provided to an employee once a year provided they have completed any previous bike hire plans.
Bike to Work is an independent company created to help both employers and employees take advantage of the Green Transport Plan Initiative and the associated tax benefits of the scheme.
Bike to Work use our industry experience and trade contacts to get you riding to work on a bike of your choice from your local preferred participating bicycle shop.
Under the initiative, salaried employees who:
are employed and paying tax in the UK.
Bike to Work customers are not limited to any particular bike or accessory brands and therefore can choose the best for quality and value-for-money. This results in the optimum package of bike, accessories, and safety equipment.
Bike to Work provide a single point of contact for employers and employees wishing to take up the scheme. Bike to Work will assist you in setting up and running a successful Cycle to Work scheme at no cost to the employer. We can help you to get a scheme going in no time, offering great customer service and access to all the leading bike brands. The result? Better scheme uptake, and a host of organisational and individual gains.
Bike to Work is also fully supported nationwide and liaise with independent bike dealers providing up-to-date literature and point-of-sale material.
Bike to Work will offer full support for handling your queries, and advice on choice of bike and safety equipment.
Bike to Work partners (the cycle shops in your area who are partnering with Bike to Work) will be your local port of call for test riding etc.
Once the bike package is purchased these local bike shops will also handle servicing and any warranty issues.