Cycle to Work Scheme
You may have heard of the Cycle to Work Scheme, but how does it work and can your employees really get a new commuting bike without them having to pay for it upfront? As an employer that signs up to this scheme you could end up paying less employer national insurance contributions, saving around 13% on the cost of the bike. Plus gain a workforce that is energised by an active commute; feeling happy and productive for the day ahead.
So, what is the Cycle to Work Scheme? It is a scheme designed to help employees save money and spread the cost of a new bike over 12 monthly tax-free instalments.
How it works? There are a few different scheme providers out there each with their own variation of the Scheme but the basic principles are the same.
You register your business with a scheme provider
Your employee chooses the bike they want.
You pay for the bike.
Depending which scheme you sign up for, third party lease arrangements can be made so that employers can avoid any upfront outlay for the bicycles and equipment supplied through the bike to work scheme. In this way, the scheme will have absolutely no impact on the organisations cash flow position
Your employee pays you back through 12 monthly instalments taken through their salary.
Tax free? Monthly payments for the new bike are taken from the employee’s gross salary, so before any tax is deducted. Your employee will be paying less Tax and NI every month. This means that at the end of the year your employee will have saved some tax, which equates to around 25% of the actual cost of the bike. The scheme is easy to access and shouldn’t take up too much admin time. If you have any queries about the scheme or are thinking of setting it up, maybe we can help or advise.