What is The Cycle To Work Scheme?

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.

Benefits of The Cycle To Work Schemes

• Reduce your carbon emissions to help in the fight against climate change.
• Improve your health and fitness and reduce your risk of serious illness.
• Become more energised and motivated.
• Save money on the cost of running a car and/ or public transport fares.
• No more stress about finding and paying for car parking.
• Reduce anxiety about sharing space on public transport.
• Enjoy using the bike for weekend pursuits.

What is Salary Sacrifice?

• The Cycle to Work Scheme uses a salary sacrifice mechanism for you to make tax savings.
• Your employer buys a scheme voucher which you redeem against your chosen bike package
• You repay your employer by accepting a reduced salary in exchange for the benefit of your package. This is salary sacrifice.
• Your employer will take payments from your gross salary which means you’re not paying tax and National Insurance on the cost of the package.
• The monthly payments are interest-free making them affordable and easy to manage

Why Do You Hire The Bike?

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.

What Bike and Equipment Can I Get?

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

• Bikes (including all variants of adapted bikes, recumbents and hand cycles)
• E-bikes
• Cycle specific clothing
• Tyres
• Components i.e. group sets, brake levers
• Helmets
• Mudguards
• Locks
• Lights
• Frames
• Child seats
• Bags (on-bike and off-bike)
• Cycle trailers
• E-bike conversion kits

List of Equipment That The Scheme Doesn’t Allow

• GPS ride trackers and navigation devices
• Bike racks for cars
• Cameras
• Turbo trainers or rollers
• Gift cards
• Nutritional products / foodstuffs
• Power meters
• Headphones
• Children's bikes

The Different Cycle Schemes We Offer

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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The Green Commute Initiative (GCI)

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.

How Much Will You Save?

You save between 33.25% and 48.25% on a bike and accessories; the amount you save depends on your personal tax circumstances.

Are You Eligible For The Scheme?

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.

How Long is The Salary Sacrifice Period?

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 Will You Own The Bike?

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.

How Much Can You Spend?

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:

• you may need an e-bike to beat the hills or arrive at work sweat-free, or
• you might need a hard-wearing bike with a steel frame to support your cycling
• you might need a specialist bike that suits your body type or any disabilities you have.

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.

How To Set Yourself Up With The Green Commute Scheme

1. Pick your bike package and get a quote from our team (Leisure Outlet) to show your employer. Feel free to call us on 0115 784 5942 or speak to us Live Chat to discuss your options.
2. Fill in the form on the Instant GCI quote page.
3. The proforma will then be generated, ready for you to take to your employer to be paid.
4. The voucher is then emailed to you so you can collect your bike. It is vital that you take your voucher and photo ID with you when collecting your package in-store or send the voucher and ID to the Leisure Outlet team if you're getting the package delivered.
5. After the hire agreement and salary sacrifice period ends, GCI invites you to enter into a free of charge loan of the bike for a further five years and nine months or however long is left on the 6-year hire agreement.
6. After the loan period ends, you can make a nominal £1 payment to take title ownership of the bike. The bike has no market value at this point

For more information, please visit The Green Commute Initiative Website.

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The Cycle Scheme

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.

How Much Will You Save?

You save between 26% and 40% on a bike and accessories; the amount you save depends on your personal tax circumstances.

Are You Eligible For The Scheme?

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.

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.

How Long is The Salary Sacrifice Period?

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.

When Will You Own The Bike?

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.

How Much Can You Spend?

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:

• you may need an e-bike to beat the hills or arrive at work sweat-free, or
• you might need a hard-wearing bike with a steel frame to support your cycling
• you might need a specialist bike that suits your body type or any disabilities you have.

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.

How To Set Yourself Up With Cyclescheme?

1. Pick Your Package that suits your needs. Just a bike? A bike and accessories or just accessories.
2. Once you have a budget in mind contact our team (Leisure Outlet) to get a quote for the package. Feel free to call us on 0115 784 5942 or speak to us Live Chat to discuss your options.
3. Show the quoted package to your employer.
4. Your employer will review your application and pay for your Cycle scheme package.
5. Cyclescheme will then send you an eCertificate. You can exchange your eCertificate for your gear in-store or online. It is vital that you take your voucher and photo ID with you when collecting your package in-store or send the voucher and ID to the Leisure Outlet team if you're getting the package delivered.
6. When your Hire Agreement and salary sacrifice ends, you can keep your Cyclescheme package by making a small additional payment. Cyclescheme will contact you regarding ownership options at the end of your Hire Agreement.

For more information, please visit The Cyclescheme Website.

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