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Cycle To Work with Cyclescheme

How it works

Your employer buys a bike for you to ride to work, you ‘hire’ it through salary sacrifice (which is where you save, by not paying tax and National Insurance on the monthly fees) and at the end of the ‘hire’ period you buy the bike from your employer.

Over 400,000 people have already bought a bike on the scheme, which was introduced as a tax exemption in 1999 by the government to ‘promote healthier journeys to work and reduce environmental pollution’. The scheme has achieved that in spades, with a recent report claiming it saves the entire CO2 output of a city the size of Hereford each year.

Because it was set up to promote work journeys rather than cycling in general, your employer technically remains the owner of the bike. Everyone knows that in practice the employee is ‘buying’ the bike, but that isn’t legally the case until the salary sacrifice ends and the employer ‘sells’ the now heavily depreciated equipment to the employee.

Reasons to sign up

  • The scheme doesn't cost anything to set up.
  • The scheme can be easily completed online and you will be ready to offer your employees a bike within 2 weeks.
  • It's a great thing to offer to your employees simply because they can save up to 42% off the cost of a new bike.
  • Cycling to work helps you stay fit and healthy, burns a lot of calories, and reduces your carbon footprint.
  • This all makes for happier, healthier and more motivated staff.

Which Cycle to Work vouchers do Blazing Bikes Accept?

We accept many vouchers from companys from Cyclescheme, Halfords, Bike2Work and many more

How much can I Spend?

For most, the maximum is £1000 including VAT. If your employer has a consumer credit license then the allowance is higher.

What can I buy?

Any cycle you can use for commuting. It can have two, three or even four wheels. It can be a road bike, hybrid, mountain bike or a folding bike but cannot be a children's bike. You can also use the voucher to get any safety equipment you need for commuting. This might include:

- Helmets
- Bells and Bulb horns
- Lights
- Mirrors
- Mudguards
- Cycle Clips and dress guards
- Panniers, Luggage
- Locks and Chains
- Pumps and repair kits
- Reflective clothing, white front reflectors and spoke reflectors

Can I only use it to cycle to work?

No, the government guidelines stipulate that the bike be used at least 50% for riding to work. So do what you like for the other 50%.

Who owns the bike?

Technically your employer owns the bike and equipment and loans it to you during the hire period.

What happens at the end of the hire agreement?

To keep the scheme tax free, there can be no guarantee you employer will transfer ownership at the end of the hire period. However, this is usually what happens. Because HMRC has set fair market values that the employer must pay to keep the bike, you may be asked to pay 18% of the value for a bike costing less than £500, or 25% for one costing £500+ More often, though, your employer will agree to extend the hire period by up to 36 months. During this time you make no further payments and at the end of the term the bike's fair market value is considered negligible and ownership will be transferred to you.

How much will i actually save?

This all depends on your own tax status. Generally, without taking into account any payments or deposits at the end of the hire term, basic rate taxpayers will save 32% and higher rate taxpayers 42%.

See how much you can save with the Cyclescheme Calculator

Next step get in touch with us either by email or by phone 01694 781515 where one of our team will be glad to help out with your enquiry and get you on the fast track to saving up to 42% on your next bike.

 

The complete facts below

So How Does It All Work? How do employees get a tax-free bike for work through Cyclescheme?

Step 1. Once an employer is partnered with Cyclescheme (employers can sign up here) all employees wishing to participate visit Blazing Bikes Store or our website to choose the bike and, if required, safety equipment.

Step 2. Employees then apply for a Cyclescheme Certificate online using a unique link to Cycleschemes secure Extranet facility. The unique link is provided to employers and distributed to all employees. The employee will usually sign an online Hire Agreement at this time.

Step 3. If the employer approves their application they will countersign the Hire Agreement and 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.

Step 5. The Certificate is then redeemed in the bike shop and exchanged for the bike package. 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, employees 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.

 

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 (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 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.
  • Figuring out how Salary Sacrifice Arrangements work can be confusing, particularly when participants can only see the gross salary sacrifice amount on their hire agreement. So where’s the saving? Here’s a guide to how it all works.

 

How do participants save?

The key to understanding the way participants save money on a salary sacrifice arrangement is in understanding how they pay tax.
Cycle to Work scheme participants can potentially save on 2 forms of tax; Income Tax & Employees’ National Insurance Contributions (NICs).
Income Tax and Employees’ National Insurance Contributions (NICs) are expressed as a percentage and applied to participants’ gross salary amounts. The tax deductions are then made and what the participant gets in their pocket is NET salary.
This is the clever bit; by reducing their gross salary they reduce the amount the income tax and NICs are calculated on, hence participants pay less of both.

 

  •  
  • Salary before
  • scheme participation
  • Salary during
  • scheme participation
  • Monthly Gross Salary
  • £1,200.00
  • £1,200.00
  • Bike value including VAT
  • Gross salary sacrifice total
  •  
  • £500.00
  • £500.00
  • MONTHLY GROSS SALARY SACRIFICE = £500 / 12 months
  • (this amount appears on the hire agreement)
  •  
  • £41.66
  • Monthly Gross Salary after salary sacrifice
  • Monthly NIC contribution (12%)
  • Monthly income tax contribution (20%)
  • Net Salary
  • £1,200.00
  • £144.00
  • £240.00
  • £816.00
  • £1,158.34
  • £139.00
  • £231.67
  • £787.67
  • MONTHLY NET SALARY REDUCTION
  • £816.00 minus £787.67=
  • £28.33
  • MONTHLY SAVING
  • £41.66 minus £28.33 =
  • £13.33

 

What are the savings for the employee and employer?

  • Typical savings for employees are between 32% for basic rate taxpayers and 42% for high rate taxpayers, but the actual amount depends on the employee’s personal tax band and the way the employer runs their scheme. If the employer uses external finance (i.e. borrows the money to buy the bikes from an outside agent) then savings will be approximately 5% lower.
  • Employers can typically save 13.8% of the total value of salary sacrifice, due to reductions in Employers’ National Insurance Contributions (NICs) due.

 

What bikes are available through the scheme?

  • We are able to provide you with differing bikes from mountain bikes, road bikes, cyclocross bikes, folding bikes, electric bikes.

 

What is the maximum value bicycle and safety equipment package employees can select through the scheme?

  • The Office of Fair Trading (OFT) has issued a group consumer credit licence to cover Employers implementing Cycle to Work Schemes that are limited at £1000 inc. VAT per Certificate.
  • Employers who have their own Consumer Credit Licence Category B (consumer hire) can allow employees to request Certificates of a higher value.  Alternatively, employers wishing to increase the Cycle to Work Certificate value can apply for their own individual Consumer Credit Licence from the Office of Fair Trading.  

 

Who actually owns the bike?

The bike and equipment remain the property of the employer throughout the hire period, unless the employer uses a finance company to fund the bikes; in this case the finance company or funding bank will own the bikes.

  • Who is responsible for maintaining the bike and what happens if it is stolen?
    It is the employee’s responsibility to maintain the bike. Cyclescheme Partner Shops will be able to advise about maintenance and servicing depending on how the bike is used and stores offer a free first service. 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. Cyclescheme strongly recommend that scheme participants insure the bicycle and safety equipment as soon as they collect it from the store.

 

What's the best way to insure the bike?

By insuring your bike, scheme participants can now maintain their savings by avoiding hefty replacement costs in the event of accidental damage or theft and continue to enjoy the full tax exemption for the rest of the hire period. Cyclescheme has partnered with Cycleguard to bring you an insurance product that will support you and your bike throughout your Cyclescheme agreement and beyond. For further information on cycle-specific insurance please visit Cycleguard on www.cycleguard.co.uk/cs15 (Cyclescheme participants can obtain a fantastic 15% discount on Insurance and Roadside Recovery).

 

Do you have an open framework agreement?

Yes. Cyclescheme are approved within the MOD Open Framework Agreement. The Framework is available to all Public Authorities, runs until 31st March 2015 and is free to use. For more details and a simple guide to implimentation please click here.

 

How do I return my bike?

If you do not wish to take ownership of the Equipment or sign the Extended Use Agreement you must return the bicycle to Cyclescheme Ltd.

You need to inform Cyclescheme that you wish to return the bicycle by writing to us at the below address:

Cyclescheme Ltd
PO Box 3809
Bath, BA1 1WX

You must inform Cyclescheme of your intention to return the bicycle

Once we have received written notice of your intention to return the bicycle, Cyclescheme Ltd will contact you with further instructions. Whilst Cyclescheme Ltd will not charge for disposal of the bicycle, you will be required to deliver or post the bicycle and are responsible for any financial cost in doing so.

Once the bicycle has been received and verified as the original hired equipment you will be contacted with an acknowledgement of receipt and no further correspondence will be sent to you.

If you do not inform us of your intention to return the bicycle, this would result in a benefit in kind that should be declared on a P11D which may result in any tax savings, made during the hire period, being disallowed. Futhermore, you will be responsible to pay Cyclescheme Ltd any costs that we reasonably incur in recovering the bicycle from you.

 

Does the bike have to be used for commuting?

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.

 

What happens at the end of the hire period?

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 in addition to others, either directly or via Cyclescheme.
At the end of the hire period, Cyclescheme will contact employees to discuss the options available.
The most attractive option for employees will be to pay a small, refundable deposit (3% or 7% of the equipment value*) and continue to use the bicycle or safety equipment for an extended period of up to 36 months.
At the end of this period, if the employee does not wish to keep the bicycle or safety equipment, then Cyclescheme will refund the deposit in full.  Alternatively, Cyclescheme may at its discretion, offer ownership of the bicycle or safety equipment to the employee at this point, and no further action or payment will be required if they wish to keep the bicycle or safety equipment.
For more information, please refer to the article 'HMRC Market Value Clarification' in our 'Employer Updates' section, or click here to watch our website video guide to our simple end of hire process.
* the lower figure is for an equipment value of less than £500 and the higher one for equipment value of £500 or more. These figures include VAT.

 

What happens if an employee leaves their job or is made redundant?

Once signed, the Hire Agreement is non-cancellable following a cooling-off period of 14 calendar days following collection/receipt of the equipment. 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 (please refer to 'What happens at the end of the hire period?' above).

For further information please see the Department for Transport’s Cycle to Work implementation guide:
http://www.dft.gov.uk/pgr/sustainable/cycling/cycletoworkguidance/

 

I already own a bike, can I obtain just safety equipment and accessories through Cyclescheme?

Yes. Your Cyclescheme application can include safety equipment and accessories without the need to include a bike in your request.

 

I already have a Hire Agreement in place, can I get another Certificate for safety equipment only?

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.  If you are in an ‘Extended Use Agreement’ with Cyclescheme (as part of the End of Hire Process), you are able to request another Certificate.

 

Is there a minimum spend for safety equipment only requests?

Yes. If you are submitting a safety equipment-only request there is a £100 minimum.

 

What safety equipment is allowed?

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

This list is by no means exhaustive, so if you do have questions about what equipment you can obtain please contact Us.  Bicycle components such as Frames etc are not permitted.