Thinking About The Cycle To Work Scheme?

Have you or your employees decided to cut down your carbon footprint and get fit by making use of the Cycle To Work scheme?

You’ve probably heard of the Cycle to Work Scheme so let me tell you a bit about what it is and how it works. In a nutshell, the scheme allows employees to spend on bikes and equipment, tax-free. It is designed to spread the cost of the bike over monthly instalments which are deducted from the employee’s salary before tax and national insurance (NI) is calculated.

It is a simple process, as follows:

- The employer registers with a scheme provider
- The employee chooses the bike and equipment they want
- The employer pays for it
- The employee pays back the costs to the employer by salary sacrificing monthly instalments taken through payroll

Salary sacrifice deductions are taken from your gross salary, meaning you pay less tax and NI.

For example, on a value of £1,000 over 12 months, the deductions will be £1,000 / 12 (months) = £83.33 which will be taken from gross pay and you will save tax and national insurance on this amount.

In addition, the employer saves 13.8% employers national insurance. At the end of the scheme you effectively have to buy the bike at what HMRC call a fair value, but this is typically below 10% of the bike cost.

It was previously believed that the maximum spend was £1,000, but the newest guidelines state that this is not the case, also confirming that e-bikes are not exempt. You are allowed to include accessories to go along with your bike such as helmets, lights, mudguards, locks and even reflective clothing.

You can use the bike and equipment to cycle to work as well as use it in your leisure time. No one is ever going to stand outside your workplace with a clipboard, totting up your journeys, but you can’t buy items clearly not used for this purpose.

Figures show that over 1.6m people at 40,000 businesses have already used the existing Cycle To Work scheme, with 62% non-cyclists, novice cyclists or occasional riders before signing up. The government reckons that economic benefits of at least £72m have come from improved physical fitness and associated health benefits, with 49% of users reporting that they joined the scheme to help them keep fit.

So with economic and health benefits like that, why wait? Get on your bike!

If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.