- Who is eligible for the scheme?
- Is the scheme available to all employees?
- Who administers the scheme?
- How do we promote the scheme to our employees?
- Do we have to be registered for VAT to use the scheme?
- Can the employer reclaim VAT on the purchase of the bicycle and equipment?
- Do I need approval from HMRC?
- Are there any credit-checks involved?
- How are the savings made?
- What is a salary sacrifice?
- When do I start to pay?
- Can I pay off the balance earlier?
- Who does the bike belong to?
- What happens when the instalment plan has ended?
- What if my employment ends?
- What happens if I am off work?
- How much does the scheme cost to the employer?
- Where can I buy my bike?
- How much can I spend?
- What equipment can I buy?
- Can I buy a more expensive bike than the voucher value?
- Can I use my voucher to buy a bike for someone else?
- Can I purchase more than one bike?
- What do I do if my bike is stolen or damaged?
- Can I use my bike during my leisure time?
- What documentation do I need to sign?
- When can I collect my bike?
- What happens if the bike needs maintenance?
Who is eligible for the scheme?
All company employees qualify for the scheme, providing that they are UK Taxpayers via the PAYE system and over 16 years of age. Earnings must be above the national minimum wage after the salary sacrifice has been deducted. Employees under the age of 18 would need a guarantor to be able to participate. Self-employed individuals are not permitted to participate in the scheme.
Is the scheme available to all employees?
Government guidelines state that to qualify for the tax exemption, the scheme must be offered to all employees and not just directors or to certain employees as an incentive.
Who administers the scheme?
Bike 2 Work Scheme will administer the scheme free of charge on behalf of the employer. All the employer needs to do is deduct the monthly salary sacrifice from the employee's salary - information that we will provide.
How do we promote the scheme to our employees?
Bike 2 Work Scheme will provide advertising literature in order for employers to promote the scheme to their employees.
Do we have to be registered for VAT to use the scheme?
You do not need to be VAT registered to run the scheme. The savings are made through tax and NI only.
Can the employer reclaim VAT on the purchase of the bicycle and equipment?
Employers are able to claim back VAT on bicycles if they are used to reduce car use, increase staff health or for the implementation of a green travel plan. Safety helmets are exempt from VAT. However following the Astra Zeneca court case in 2011 HMRC announced that employers are no longer able to pass the VAT saving onto the employee from 1st January 2012.
Do I need approval from HMRC?
You do not need prior authorisation from HMRC to take advantage of the Cycle To Work Scheme or to use a salary sacrifice to offset the cost.
Are there any credit-checks involved?
There are no credit-checks involved.
How are the savings made?
The scheme allows employees a tax exemption whereby they save on income tax and NI contributions by having the cost of the bike deducted from their gross salary via a salary sacrifice. Payment is to be made in the form of interest free weekly/monthly instalments.
What is a salary sacrifice?
Salary sacrifice is where an employee gives up the right to part of their pay due under his or her contract of employment. Usually, the sacrifice is made in return for the employer's agreement to provide the employee with some form of non-cash benefit.
When do I start to pay?
Salary sacrifice is to commence when the employee has signed their hire agreement and their voucher has been issued
Can I pay off the balance earlier?
No, once agreed upon the salary sacrifice period is fixed. The minimum period is 3 months.
Who does the bike belong to?
The employer is the owner of the bike and the employee leases the bike from their employer for the duration of the salary sacrifice period.
What happens when the instalment plan has ended?
The employer can offer the employee the chance to make a fair market value payment for transfer of ownership of the goods as per HMRC guidelines. This is to be deducted from the employee's net salary and is subject to VAT.
What if my employment ends?
If employment ends before the end of the scheme then the bike will become a taxable benefit. The remaining balance owed to the employer is to be deducted from the employee's final pay.
What happens if I am off work?
If an employee is on leave and their monthly salary sacrifice cannot be met (eg: earnings fall below the National Minimum Wage Limit) then their payments must be suspended until they are earning above the limit again.
How much does the scheme cost to the employer?
The scheme is free of charge to set up and costs nothing to run. The employer makes the initial purchase and then leases the bike/equipment to the employee via a salary sacrifice, until the full amount is recovered. Employers typically save 13.8% of the total value of the salary sacrifice total per employee.
Where can I buy my bike?
You can purchase your bike and equipment from any our of our partner bike shops. Be sure to quote 'Bike 2 Work Scheme' when requesting your written quotation.
How much can I spend?
Up to £1000 per employee is permitted. For purchases over £1000 the employer will require a Consumer Credit License. The Office of Fair Trading has issued a license that permits employers to issue hire agreements up to the value of £1000 in order to run a Cycle To Work Scheme.
What equipment can I buy?
Eligible equipment includes cycles and cyclists safety equipment eg: cycle helmets, bells and bulb horns, lights, mirrors and mudguards, cycle clips and dress guards, luggage carriers and straps, locks and chains, pumps and repair kits and reflective clothing.
Can I buy a more expensive bike than the voucher value?
The limit is set at £1000. Employees are not permitted to add their own money to the purchase.
Can I use my voucher to buy a bike for someone else?
Due to the tax exemption the bike and equipment purchased must be for personal use. The voucher is exclusive to the employee and non-transferable.
Can I purchase more than one bike?
An employee can purchase more than one bike but the two combined cannot total more than £1000. Both bikes must, however, be used by the employee for journeys to and from work. For example, you may get a summer bike and a winter bike to accommodate the different conditions.
What do I do if my bike is stolen or damaged?
It is recommended that the employee arrange appropriate insurance to cover the bike and equipment.
Can I use my bike during my leisure time?
Yes, but the equipment must mainly be used for travelling to and from the employee's place of work. The government guidelines recommend that at least 50% of the time using the equipment should be for work related journeys.
What documentation do I need to sign?
The employer will need to sign up with Bike 2 Work Scheme. Each employee will need to sign a hire agreement, which sets out details of their salary sacrifice. We will provide the necessary paperwork that ensures you will comply with all the regulations.
When can I collect my bike?
Your bike and equipment can be collected as soon as you receive your voucher from Bike 2 Work Scheme. We recommend that you contact the bike shop prior to collection. You will need to take photographic ID with you to the bike shop when redeeming your voucher.
What happens if the bike needs maintenance?
The employee is responsible for maintaining their bike (eg: repairs and servicing). Our Partner Bike Shops will be happy to offer guidance.