Cycle to work – encourage your employees
A cycle to work scheme can encourage employees to make healthier and greener journeys to work.
Under the scheme, your employees could be loaned a bike and/or additional cycling safety equipment plus other accessories by your organisation. Thus enabling them to travel all, or part of their journey, to and from work, whilst at the same time generating a tax benefit.
The qualifying journeys for employees who might wish to take advantage of a cycle to work scheme are those:
- Journeys between their home and their workplace
- Between one workplace and another
- To and from the train station to get to work
The cost of a cycle to work scheme
Employers can recover all or part of the cost of providing and loaning out the bike and/or safety equipment in the first instance. This is usually up to the value of £1000. Employees will then make regular payments back to their employer over an agreed period, typically of 12 to 18 months duration, to spread the cost.
The loan payments are usually taken out of monthly remuneration through a ‘salary sacrifice’ arrangement. This means that a lower overall amount of salary is accepted in return for the benefit. At the end of the loan period, employers will give the opportunity for employees to buy the cycle for its full market value. In return for one final lump sum payment, or to continue loaning the cycle at no cost for future qualifying journeys.
Which cycle to work scheme is right for your employee?
Initially, employees are advised to consider whether the scheme’s arrangements are right for them. There are three packages available to choose from:
- No accessories – CycleScheme bicycle only.
- Cycle and accessories – CycleScheme package.
- Accessories package (for employees who already have a bicycle under the scheme).
Application for the cycle to work scheme
In the first instance, employers need to sign up with Cyclescheme. They will then receive a unique employer code via cyclescheme.co.uk for their employees to use when they apply to receive their chosen package.
The application pages for both employers and employees involve being guided through a simple form. The form requires work details, contact information, and the value of the Cyclescheme Certificate being applied for. When the employee has submitted the form, the employer receives a copy of a Hire Agreement.
Once the application is approved and has been paid for by the employer, the employee will receive a Cyclescheme Certificate. This can then be exchanged for the items in the chosen Cyclescheme package. This can be done via a visit to one of the 2000 UK wide outlets authorised to supply the equipment or via an online process if preferred.
What happens when the Hire Agreement and Salary Sacrifice end?
When the Hire Agreement and salary sacrifice arrangement ends, the employee can choose to gain ownership of the Cyclescheme Package by making a small final payment. For a Cyclescheme package under £500, this figure is just 3% of the original value. For a package over £500 in value, the amount equivalent to 7% is payable i.e. a maximum of £70 on a £1,000 package. Under this element of the scheme, the bike remains ‘hired’ for a further 36 months, but with no more monthly payments. Ownership is then officially transferred to the employee at the end of this period at no extra cost.
If you need any further information on this or similar employee salary sacrifice benefit schemes, Chamber members can contact Qdos HR on 01455 852037. We will be pleased to discuss all aspects of your organisation’s requirements with you.