31st October 2022
How Bike2Work Scheme can help you cut business costs
Bike2Work Blog Team
It’s no secret that the UK’s getting more and more expensive. Rising inflation, soaring energy prices, and increased National Insurance Contributions are affecting everyone. Faced with tightening budgets many businesses right now see employee benefit schemes as low priority or easy targets for reducing spend. However, by taking advantage of Bike2Work Scheme, you could save up to 15% on NI contributions.
Interested? Read on to find out more.
So, how can signing up for an employee benefit scheme like Bike2Work help save me money? As of April 2022, National Insurance contributions have risen to 13.25%. This means that workers and employers across the UK are now paying 1.25% more than previous years.
Cycle schemes like Bike2Work are paid for through salary sacrifice. This means that payments are taken from your employees pre-tax income each month. This payment method technically reduces your annual salary leading to a reduction in income tax and National Insurance paid.
By encouraging your employees to take advantage of salary sacrifice schemes, you’re able to provide incentives and reduce your employer NI contributions at the same time.
For example: if a company with 100 employees has a take up of 5%, the average bike cost would be £1,600. £1,600 multiplied by 5% would provide savings of over £1,200.
However, there are few important rules to be aware of before you start slashing away at your monthly salary:
- Pre-tax income can only be reduced as low as the National Minimum Wage using salary sacrifice schemes.
- Salary sacrifice schemes must be arranged by the employer and reflected in your employee’s employment contract. Any opt-ins or outs would facilitate a new contract between yourself and your employee.
- Salary sacrifice schemes can affect your employees entitlement to a number of earnings (i.e Maternity Allowance, Additional State Pension) and contribution (i.e. Incapacity Benefit, State Pension) based benefits.
- Not all salary sacrifice schemes lead to a reduction in National Insurance/Income Tax.
Does your business take advantage of salary sacrifice schemes? cutting costs?
Let us know on social media!
If you’re an employer who’s looking for a new way to motivate your employees, visit our FAQ for more information on the Bike 2 Work scheme and how your business can take advantage of the government's tax-free cycle scheme.
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