19th July 2023

What limits can employers place when signing up to Bike2Work Scheme?

Bike2Work Blog Team

What limits can employers place when signing up to Bike2Work Scheme?

Are you an employer thinking about setting up a Bike2Work scheme? Maybe you've heard about the benefits of cycling to work for both your employees and the environment, but you're not sure where to start. One question that might be on your mind is, what limits can employers place when signing up to the Bike2Work Scheme?

In the event that an employee leaves the company during the scheme, it’s your responsibility to recoup as much of the cost of the bike that you’re able from your employee’s final pay. If you’re unable to cover the remaining costs that could leave your business out of pocket or even lead to small claims court. This is why we encourage all employees to set limits on the scheme and lend responsibly.

It's important to note that until 2019, bikes were limited to a maximum value of £1000 under the scheme. However, this changed in 2020, and there is no longer a limit on the value of bikes that can be provided to employees through the scheme. This means that you can now offer your employees a wider range of bikes, including electric bikes and more expensive models. Since the limit has been removed, we seen the average price of a bike purchased through Bike2Work Scheme increase up to £1,890.

But we understand that companies may still worry about being stuck with the bill, especially if they offer high-value bikes. That is why it is essential to set limits that take into account your current cash flow and the responsible lending principle of ensuring that your employees can afford the payments. HMRC offers guidance that allows employers to set parameters within the scheme, ensuring fairness and practicality. You have the liberty to determine the maximum value of the bike or cycling equipment that can be purchased, allowing employees to choose from a range of options that suit their needs.

One way to do this is by setting limits based on percentages instead. For example, you could limit the cost of the bike to 5% of the employee's monthly average salary. This ensures that the payments are affordable for your employees while also protecting your business's cash flow. Or you could consider implementing a first come, first served approach. This allows employees to sign up for the scheme until the allocated budget is exhausted. It's a win-win, as employees get the benefit of the scheme while you maintain control over cashflow.

Another consideration when setting limits is the length of the scheme. While the Bike2Work Scheme allows for schemes of up to four years, this may be too long for most people. You can set a shorter duration to ensure that your employees are committed to the scheme and that your business isn't left with unpaid bills if an employee leaves. Whether it's a one-time deduction or spreading payments over several months, you have the freedom to choose. But beware! There are limits, whatever the arrangement you must ensure that the repayment period does not cause your employee’s salary to fall below the National Minimum. Using Bike2Work schemes free landing pages you can make sure that your employees are fully informed of these rules and limits with minimal hassle.

It's also worth considering your employees' circumstances when setting limits. For example, you may want to ensure that employees have passed probation and don't have any disciplinaries before providing them with a bike. Additionally, you could consider providing information on bikes for each salary bracket, with bikes at different price points, to ensure that the scheme is open and accessible to all your employees.

The Bike2Work Scheme is a fantastic way to encourage your employees to cycle to work, benefiting both their health and the environment. While there are limits that employers can place on the scheme, these are mainly to ensure that the scheme is affordable for employees and that businesses are not left with unpaid bills. By setting responsible limits, you can offer your employees a valuable benefit while also protecting your business's finances.

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