Bike2Work Salary Sacrifice Scheme
Bike2work is a salary sacrifice scheme – a scheme that involves agreement between the employee and the employer whereby part of the employee’s pay is given up so that the employer can provide a particular service, in this case a bicycle. But why therefore should you agree to a service such as Bike2work?
By signing up to a salary sacrifice scheme such as this, you as an employee will ultimately save money on the equipment provided. For starters, this scheme is exempt of tax payments, so as an employee, the equipment provided to you will not incur any tax when it is deducted from your wage. Furthermore, payment is to be taken in either monthly or weekly instalments which are interest free – so you know exactly how much money will be deducted each time.
The way this salary sacrifice scheme works is by the employer making an initial investment in the equipment on the behalf of the employee. The employer covers the cost of the equipment (up to £1000) and through the employee’s gross pay, a sum is deducted. This saves up to 42% in tax (if you are a high rate payer), and employers can typically save up to 13.8% of the salary sacrifice amount!
The bike belongs to the employer throughout the repayment process and even if employment ends for your employee, the remaining amount to be paid is deducted from the net pay when employment is terminated. The bike becomes a taxable benefit in this instance.
Ultimately the situation is a win-win for both the employer and the employee. Don’t let the terminology of ‘salary sacrifice’ put you off – register today to start the journey to a healthier and fun way to get to and from work!
If you still have any questions, consult our FAQ’s section or call us on 0845 5279273 and we will be happy to help!