Cycle to work scheme FAQs
Any size employer.
Eligible employees must receive salary via the PAYE system, and earnings should be more than the National Minimum Wage after salary sacrifice.
There is no credit check for employees wishing to participate, and under 18s can join the scheme if their guardian signs a guarantor agreement.
Salary sacrifice occurs when an employee agrees to give up part of their salary for an agreed period (in the case of the Cycle to Work scheme this is usually 12 months) in exchange for a non-cash benefit, such as the loan of a cycle and safety equipment.
As salary sacrifice is taken from the gross salary (before tax) rather than net pay it means the employee pays less income tax and National Insurance.
Typical savings for employees are 32% for basic rate taxpayers and 42% for high rate taxpayers.
Employers can typically save 13.8% of the total value of salary sacrifice, due to reductions in Employers’ National Insurance Contributions (NICs) due.
You can select electric bikes, folding bikes, traditional cycles, specialist cycles so long as they are being used predominantly for commuting.
There is no maximum.
Employers who have their own Consumer Credit Licence can allow employees to request cycles of a higher value.
For orders over £1,000, contact us for more details.
The cycle and equipment remain the property of the employer throughout the hire period.
If the employer uses a finance company to fund the cycles the finance company or funding bank will own the cycles.
The bike manufacturers will be able to advise about maintenance and servicing depending on how the bike is. If the bike is stolen, as long as the employee replaces the bike and continues to use it mainly for commuting purposes, the employer can continue to take the salary sacrifice reductions from gross salary.
This means the participant can still take advantage of the income tax and National Insurance Contribution (NIC) savings.
Employees should use the bike mainly for commuting to and, if relevant, between work places (at least 50% of the bike’s use should be for work purposes).
However, the bike can also be used for non-work purposes and there is no need for employers to monitor individual usage or for employees to keep a mileage log.
Please note that employees cannot claim business mileage allowance with a bike that is being hired to them by their employer.
In order to preserve the tax benefits of the scheme, there can be no guarantee or obligation to transfer ownership to the employee immediately after the hire period has ended.
However, employers generally choose to offer this option and the cost of this to the user varies on the length of time the hire period is.
Hire can be extended at no cost to the user
Once signed, the Hire Agreement is non-cancellable following a cooling-off period of 7 working days following collection of the goods.
This means that if an employee leaves or is made redundant from their employment during the hire period they are obliged to pay the remaining salary sacrifice amount in full from net pay i.e. without any tax exemptions.
If applicable, the employee may then be offered ownership of the equipment in the normal way.
Yes. Your Cycle to Work application can include safety equipment and accessories without the need to include a bike in your request.
Unfortunately if you are part-way through your initial Hire Period, you are unable to place another Certificate request until the current one has ended.
Yes. If you are submitting a safety equipment-only request there is a £100 minimum.
Allowable safety equipment includes:
- Cycle helmets
- Bells
- Lights, including dynamo packs
- Mirrors and mudguards to ensure riders visibility is not impaired
- Cycle clips and dress guards
- Panniers, luggage carriers and straps to allow luggage to be safely carried
- Child safety seats
- Locks and chains to ensure cycle can be safely secured
- Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs
- Reflective clothing along with white front reflectors and spoke reflectors
Cycle computers, trailers and certain other items are not allowed on the scheme.
If your employer is not currently offering the cycle to work benefit, ask them to contact us on 0800 088 7315 and we can set the scheme up quickly and without any up-front cost.
It is simple and does not cost them anything and in fact saves them money.