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Bike2Workscheme.co.uk

The UK’s no.1 independent provider of the Government Cycle to Work scheme

QUESTIONS?

Who is Bike2Work Scheme?

Bike2Work Scheme is a HMRC approved scheme provider of the Governments Green Transport Plan which aims to reduce environmental pollution, promote healthier lifestyles, and make cycling to work cost-effective by offering tax savings on bikes and cycling equipment. Our scheme makes it simple for Employers and Employees to take full advantage of the Government approved Cycle to Work scheme, providing all necessary paperwork and promotional materials completely free of charge. 

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 remain above the level of 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 take part in the scheme.

How are the savings made?

The savings are made via a salary sacrifice scheme. The Employer pays the initial cost of the bike/equipment and the Employee repays the company that full amount back but through their gross pay (before tax and NI) saving on tax and national insurance. A basic rate tax payer could save up to 32% (20% tax and 12% National Insurance). A higher rate tax payer could save up to 42% (40% tax and 2% National Insurance). 

Employees can spend £100 – £1000 with the savings being made by reducing tax and National Insurance on the amount “salary sacrificed” from gross pay over 12 monthly instalments. For a basic rate tax payer that’s a saving of 32%, meaning they can save over £300 on their choice of a new bike, clothing and accessories.

Below is a Payslip example, which illustrates how the reduction in gross salary results in a reduction in Income Tax and National Insurance payable.

velorbis-cycle-scheme-uk

Below is an example of how savings are made during the Hire Period for basic and higher rate taxpayers on packages hired over a 12-month period.

velorbis-cycle-scheme-uk-12-months

Does the bicycle have to be used for commuting?

You should use the bike and/or accessories mainly for commuting to and, if relevant, between work places (at least 50% of the equipment’s use should be for work purposes). However, it can also be used for non-work purposes and there is no need for you to keep a log of your journeys.

Please note that you are unable to claim business mileage allowance when using a bike that is being hired to you by your employer.

Who actually owns the bicycle?

The bike and/or accessories remain the property of the employer throughout the hire period, unless the employer uses a finance company to fund the scheme; in this case the finance company or funding bank will own the equipment.

What can I purchase through the scheme?

Employees can get more than one bike on the scheme and safety equipment which includes:

  • Cycle helmets which conform to European standard EN 1078.
  • Bells and bulb horns Lights, including dynamo packs.
  • Mirrors and mudguards to ensure riders visibility is not impaired.
  • Cycle clips and dress guards Panniers.
  • Luggage carriers and straps to allow luggage to be safely carried.
  • Child safety seats.
  • Locks and chains to ensure cycle can be safely secured.
  • Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs.
  • Reflective clothing along with white front reflectors and spoke reflectors.

It is the Employer’s choice what safety equipment is offered, but you may wish to confirm with your local tax inspector whether the equipment you provide falls within the tax exemption. You can also acquire articles of clothing that are suitable for cycling.

Who is responsible for maintenance of the bike?

It is your responsibility to maintain the bike you obtain through the scheme.

Should I insure the bike?

Velorbis recommends that you insure the bike.  Most cycle-specific insurance not only provides cover for the cost of theft replacement, but also provides personal and third party medical insurance cover and, in some cases, a roadside recovery service in the event of breakdowns.  By insuring the bike, you can maintain your savings by avoiding hefty replacement costs in the event of theft, and continue to enjoy the full tax exemption for the rest of the hire period.

What happens if the bike is stolen?

If your bike is stolen or damaged beyond repair, as long as you replace the bike and continue to use it mainly for commuting purposes, the employer can continue to take the salary sacrifice reductions from gross salary.  This means that you can still take advantage of the Income Tax and National Insurance Contribution (NIC) savings.

If the bike is stolen before it has been paid for, and it is not replaced, this unfortunately constitutes the end of your hire agreement and any outstanding salary sacrifice repayments will be taken from your net pay.

What if I leave my Employer or get made redundant?

If employment ends before the end of the hire agreement term, then the bike/equipment will become a taxable benefit. The remaining balance owed to the Employer is to be deducted from the Employee’s final net pay, ownership may then be transferred to you. Please contact Bike 2 Work Scheme to discuss your options and for further information.

Is there a maximum spending?

Employees can spend between £1 – £1,000. If Employees wish to purchase items over the £1,000 limit they can add their own money to the order, however, this will not form part of their salary sacrifice and therefore they would only make savings on the £1,000. All equipment will remain the property of the Employer during the hire agreement, regardless if an Employee has added their own money. 

If a company wishes to allow Employees to purchase equipment over the £1,000 limit and make savings on the whole amount, they will need limited permission from the Financial Conduct Authority.

What happens at the end of the agreement / payment plan once I have paid back my Employer?

Due to the rules surrounding the scheme, there can be no guarantee of transferring ownership to the Employee once the hire agreement has ended. However, ownership is generally transferred to the Employee at the end of the hire agreement.

Bike2Work Scheme will contact Employees at the end of their hire agreement regarding the options available. The most attractive option for Employees is to pay a small refundable deposit to Bike2Work Scheme (either 3% or 7% depending on the original cost of the bike/equipment) and continue to lease the bike/equipment from Bike2Work Scheme for a further 36 months. If at the end, you decide to keep the bike, Bike2Work will retain your deposit. If not, you will need to return the bike to Bike2Work Scheme and they will arrange a refund of your deposit.

You will not be charged for disposal of the bike but you will be required to arrange delivery of the bike and are responsible for any cost in doing so. Please be aware, options may vary depending on when your Employer registered with Bike2Work Scheme. Please contact us direct to find out which options are available.

Contact Bike2Work Scheme

Website: http://www.bike2workscheme.co.uk

Phone: 0845 5279273

Fax: 0845 5279274

Email: [email protected]

Address: 61 Tithebarn Street, Liverpool, L2 2SB

Contact Velorbis

If you have any questions regarding our bicycles and accessories do not hesitat to contact us on the form below.