Overview
What is The Cycle To Work Scheme?
Benefits of The Cycle To Work Scheme
What is Salary Sacrifice?
Why Do You Hire The Bike?
What Bike and Equipment Can I Get?
The Different Cycle Schemes We Offer
The Green Commute Initiative (GCI)
How Much Will You Save?
Are You Eligible For The Scheme
How Long is The Salary Sacrifice Period
When Will You Own The Bike
How Much Can You Spend
How To Set Yourself Up With The Green Commute Scheme
The Cycle Scheme
How To Set Yourself Up With Cyclescheme
The UK Government introduced the Cycle to Work Scheme in 1999. Put simply, it gives access to tax savings on cycles used for commuting. The scheme allows you to take the cost of hiring a cycle and accessories directly from your gross salary. This is known as a salary sacrifice and it means you can save between 33.25% to 48.25% off on a new bike.
Repayments are taken automatically by your employer (shown on your pay slip) and can be spread over a number of months to make it every manageable expenditure. It’s important for you to understand that the Government’s Cycle to Work Scheme is based on bicycle hire with no automatic right to ownership at the end of the hire period. You will not own the bike during the hire period.
If you own the bike, then HMRC would deem it to be an employee benefit and subject to tax which would wipe out any savings you made. The scheme is based on a hire arrangement so that no tax is applicable.
You can get whatever you need to keep you in the saddle and commuting regularly. Including any type of bike: E-bikes, cargo bikes and specialist/ adapted cycles & trikes for those with mobility issues. The majority of the items that are going to help you and your bike arrive at work (warm, safe and secure) are allowed.
List of Equipment That The Scheme Allows
List of Equipment That The Scheme Doesn’t Allow
There are many different cycle schemes available which all have slightly different processes and policies. We currently offer two-cycle schemes; The Green Commute Initiative (GCI) and The Cycle Scheme. Both schemes are very similar, however, there are a few differences, therefore, we have listed the various steps for setting yourself up on these schemes and answered some general questions you may have.
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If you decide to choose the Green Commute Initiative (GCI) You will be hiring the bike from GCI and they will retain the ownership of the bike until they agree otherwise. They will write to you with ownership options at the end of the hire period, ensuring HMRC rules are adhered to.
You save between 33.25% and 48.25% on a bike and accessories; the amount you save depends on your personal tax circumstances.
To participate in the scheme you must receive your salary via the Pay As You Earn (PAYE) and be a working adult aged 18 or over. Unfortunately, this means if you are self-employed, you’re not able to take part.
Your employer needs to be signed up and your earnings should be more than the National Living Wage (NLW) or National Minimum Wage (NMW) after the salary sacrifice is taken from your gross salary.
Additionally, the Department of Transport says at least 51% of the cycle’s use must be for commuting.
The salary sacrifice agreement is between the employer and employee and covers the repayment of the voucher cost. This can be for any period longer than three months that both parties are happy with. Common terms are 12, 18 and 24 months but it could be for as long as 60 months.
When the hire agreement ends, GCI will offer you a free of charge extended loan agreement to take the bike to six years old, after which ownership will be passed to you for a nominal £1 charge.
You won’t need to pay tax under this arrangement. If you wish to take ownership before the bike reaches six years old, this can be arranged and GCI will advise you of the tax you’ll need to pay to the HMRC.
The Green Commute scheme does not necessarily have a limit. This is to ensure riders can get the exact bike they need to improve their commute, for example:
An increasing number of employers are offering schemes without limits but it's not universal. Employers have to consider their cash flow and their employees' eligibility to join the scheme. It's important that we note that employers are under no obligation to offer schemes with a limit in excess of £1,000.
For more information, please visit The Green Commute Initiative Website.
If you decide to choose the Cycle Scheme. You will be hiring the bike from Cycle Scheme and they will retain the ownership of the bike until they agree otherwise.
They will write to you with ownership options at the end of the hire period, ensuring HMRC rules are adhered to.
You save between 26% and 40% on a bike and accessories; the amount you save depends on your personal tax circumstances.
To participate in the scheme you must receive your salary via the Pay As You Earn (PAYE) and be a working adult aged 16 or over. Unfortunately, this means if you are self-employed, you’re not able to take part.
The salary sacrifice agreement is between the employer and employee and covers the repayment of the voucher cost and this agreement usually lasts for 12 months.
There are 3 options to choose from, these are detailed below:
Own it later (Own the bike after 4-years) - You pay a small refundable deposit after your salary sacrifice agreement is over (either 3% or 7% of your certificate value) and continue to use the equipment for 3-years. At the end of the 'Own it later' (3 year) period, no further action or payment will be required, they will simply retain your deposit and transfer ownership to you.
Own it now (Own the Bike after 1 year) - Take ownership of your package after the salary sacrifice agreement is over by paying Cycle Scheme an additional 18%-25% of the certificate value in accordance with HMRC requirements.
Return – After the 4-year period is over you’ll return the package to Cycle Scheme at your own cost and no additional payment will be required.
Cyclescheme always recommends you choose our 'Own it later' agreement - this ensures fantastic end-to-end savings of at least 25-39%.
Cyclescheme will contact you with your ownership options at the end of your Hire Period. This is usually 12 months from the point you received your Certificate.
The Cyclescheme does not necessarily have a limit. This is to ensure riders can get the exact bike they need to improve their commute, for example:
For more information, please visit The Cyclescheme Website.
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