Thinking About The Cycle To Work Scheme?
It's a great way to reduce your carbon footprint ...
POSTED BY ROGER EDDOWES ON 18/11/2019 @ 8:00AM
Did last week's blog get you thinking about ways to be more sustainable? Have you or your employees decided to cut down your carbon footprint and get fit at the same time by making use of the Cycle To Work scheme?
The Cycle To Work scheme allows you to use yout bike in your leisure time too!
copyright: gbh007 / 123rf
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!
Until next time ...
Would you like to know more?
If you would like to know more about the Cycle To Work scheme for you and your employees, call me on 01908 774320, leave a comment below or click here to ping over an email and let's see how I can help you.
About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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