Cyclescheme is part of the Government’s Green Transport Plan. It allows employers to provide bikes and safety equipment to employees as a tax-free benefit. Employees basically hire the bikes through their salaries, and have the option to buy them at the end of the salary sacrifice period for a Fair Market Value payment. The payments are taken from the employees gross salary and therefore they pay less tax and National Insurance, meaning they save 30%-40% off of the full retail price.
A step-by-step guide to Cyclescheme
If your employer has signed up to Cyclescheme there are a few simple steps to obtaining your new bike and equipment.
Step 1. Find out details of Cyclescheme from your employer. Come in to Bikewise to choose a bike and safety equipment to match your requirements. We will give you a written quote to take away with you.
Step 2. Apply for a Cyclescheme Certificate online using a unique link to Cyclescheme (your employer should give you these details).
Step 3. Your employer will need to approve your application and they will then pay Cyclescheme for the full retail price of the bike and equipment.
Step 4. Cyclescheme will then post out a paper Certificate, usually to employee’s home address, or send an e-certificate by email.
Step 5. Phone Bikewise to check we have your bike in stock. Bring your certificate into Bikewise and we will give you your bike and equipment. The salary sacrifice then commences over the hire period (usually 12 months). The salary sacrifice is made prior to Income Tax and National Insurance contributions and, as a result, you will pay less of both.
Step 6. At the end of the hire period the owner of the equipment may choose to offer the employee ownership of the bike for a market value payment, or the employee may pay a small deposit allowing them to remain in possession of the bike and continue to use it.
Please note that the above procedure applies to the vast majority of schemes, but there are some variations to the above. This variation depends on how the employer’s scheme is set up, i.e., the employer may use a finance company to fund the scheme or a benefits provider. Please check with your employer.
Who can participate in the scheme?
Any size employer from any sector can partner with Cyclescheme. Eligible employees must receive salary via the PAYE system, and earnings should be more than the National Minimum Wage after salary sacrifice. Employers who pay staff close to the National Minimum Wage should contact Cyclescheme to discuss the range of attractive options available that allow lower paid employees to participate in, and benefit from the scheme. There is no credit check for employees wishing to participate, and Under 18s can join the scheme if their guardian signs a guarantor agreement.
What is salary sacrifice and how do participants save?
Salary sacrifice occurs when an employee agrees to give up part of their salary for an agreed period (this is usually 12 months) in exchange for a non-cash benefit, such as the loan of a bicycle 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.
My employer doesn't offer Cyclescheme
If your employer hasn't joined the scheme, invite them to join! Companies can benefit in numerous ways:
- Save money
- Improve fitness and productivity of employees
- Help to improve the environment
- Good PR by reducing employees carbon footprint
- London Borough of Hillingdon
- Hillingdon Hospital
- Abbotsfield School
- Kraft Foods
- Uxbridge College
For more information please visit http://www.cyclescheme.co.uk