How Can You Benefit From The Cycle To Work Scheme

The cycle to work scheme is a government initiative introduced in the Finance Act of 1999 to reduce pollution and enable and sustain healthier journeys to work. 

Under this scheme, the employer can purchase brand-new e-bikes, cycles, and related safety equipment from an external scheme provider and provide them to their employees.

Most employers use external scheme providers so that they can handle the administrative side of the scheme for them. 

With Cyclescheme, the employer doesn't need to show the company benefits at the end of the year through the P11D statutory form that the tax office needs. 

Can You Get An Electric Bike On Cycle To Work Scheme?

To get an e-bike through the Cycle to work scheme, you must be:

  • A private, public, or voluntary company employee
  • A UK taxpayer via the PAYE (Pay as you earn) system
  • 16 years or above (Employees under 18 years of age would need a guarantor to participate in the scheme)
  • Earning above the national minimum wage after the salary sacrifice deduction 

How Does The Cycle To Work Scheme Work?

First, the employee registers with an external scheme provider. Then the employee can either browse online or visit their local bike store to decide what e-bike they want

Afterwards, the employee requests the employer to purchase the e-bike. There is no restriction on the value or the number of bikes the employee is allowed to request from the employer under this scheme. Next, the employer purchases the e-bike through the external scheme provider and hands it over to the employee. 

The employee pays for the e-bike by having the payments deducted from their pre-tax or gross earnings, saving up to 42% on the PAYE and NI contributions. However, the employer can choose to pay for the e-bike as well, which would leave the employees salary unaffected.

How Do You Pay For A Bike On The Cycle To Work Scheme?

When you hire the e-bike from the employer, you can pay for the hire via the salary sacrifice arrangement with the employer that can range from 12 to 48 months.

Under this agreement, you agree to give part of your monthly salary for the benefit. In this case, an e-bike is your benefit. However, your employer remains the owner of the e-bike during the hire period. 

Once the hire period ends, usually, your employer can offer you the option to buy the e-bike.

What Are The Benefits Of Salary Sacrifice?

  • E-bike monthly repayment is taken out of the employee's gross salary before tax and NIC deduction instead of the net salary.
  • A basic rate taxpayer employee will save 32%, while a higher rate taxpayer employee will save 42% on income tax and NIC over the e-bike repayment term.
  • An employee can buy the e-bike at the end of the repayment term at a highly discounted price from the employer while also enjoying the income tax and NIC savings.

What Are The Employer Benefits Of Cycle To Work?

  • Employers can save 13.8% of the total value of salary sacrifice because of the reduction in the amount of NIC (National Insurance Contributions) due.
  • The employer can treat the e-bike cost as a capital expense in order to claim capital allowance on it in the usual manner.
  • And finally, if your a business owner, offering your team these types of incentives is just a great way to increase employee morale!

So What are you waiting for!

Check out an extensive range of bikes at FlyingDutchman who offer city, cargo and electric bikes to suit everything you could want or need.

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