The Cycle to Work Scheme is not a new scheme but one that is very often overlooked by employers. The basic principle behind Cycle to Work is that an employer leases a bike to an employee and in doing so offers them a low-cost and healthy way of commuting to work.
The process is simple. The employee chooses a bike and equipment up to the value of £1000 and seeks approval from their employer. The employer then downloads the online form and fills in their details before using the simple calculator provided to work out the monthly cost to the employee. The monthly cost is arranged by way of a salary sacrifice that is visible on the employee’s payslip. The employer then sends off the completed form and a cheque for the final calculated amount and a voucher is received. The voucher can then be used at one of hundreds of bike stores around the UK that are participating in the scheme.
Typically, the costs of leasing the bike are spread out over a 12 month timeframe although this is flexible and can be a longer period if required. After the lease period is over the employer can then choose to transfer ownership of the bike to the employee if they choose to do so. Often, a final price is agreed between the employer and employee that takes into account the decrease in value of the bike.
Generally the scheme offers a win-win situation for both the employer and the employee. The overall cost of the bike is reduced dramatically when bought through the business and paid for through a salary sacrifice. Sometimes up to a 40 per cent saving can be made. The payments by the employee are spread out over the course of a year meaning they can often buy a better model than they would otherwise be able to afford.
Using a salary sacrifice means National Insurance contributions will be lowered and could save an employer up to 13.8 per cent. In addition, the cost of the bike and cycle equipment can be treated as capital expenditure and businesses can claim capital allowances against it. The company will benefit from reduced car parking costs and happier and healthier staff, which will in turn improve productivity. Participating in a Cycle to Work scheme promotes a positive image for your business and helps to reduce environmental impacts from transport as well.
Implementing a Cycle to Work scheme in your company is simple and the cost savings and benefits to both the employer and employee make it a worthwhile investment.