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Cyclescheme is the UK’s leading tax-free Cycle to Work provider

QUESTIONS?

Is it a Government Scheme?

Yes! The Government wants to reduce congestion and emissions in our cities; that’s why they created the Green Transport Plan. This encourages working adults to swap their car commute for a cycling one, and as an incentive they will benefit from a tax exemption on the cost of their cycle commuting goods. 

Under the Cycle to Work scheme, your organisation buys the commuting package at retail price and hires this to your employee over a fixed period of time. During this time, this balance is recovered through a reduction in the employee’s gross salary (meaning they make Tax and National Insurance savings – and you make National Insurance Contribution savings too!). At the end of the hire period, Cyclescheme steps in and lets employees know what their ownership options are. 

How does Cyclescheme Work?

Tax is complicated; Cyclescheme is not. You choose a bike, hire it for an agreed length of time, then snap it up for a fraction of it’s original value. What bike and equipment do you want? Consider your commute. How far is it? What route will you take? Be honest with yourself. What are your priorities? What accessories might you need? These are all questions you should ask yourself as you prepare to revolutionise your commute! You can configure your perfect bicycle at velorbis.com.

How are the savings made?

Cyclescheme operates as a Salary Sacrifice benefit. This means that you agree to give up part of your salary in exchange for a benefit – in this instance a bike and/or accessories.  The Salary Sacrifice is taken from your gross salary (before tax) which means that you will pay less Income Tax and National insurance.

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

Can I participate in the scheme?

To participate in the scheme you must receive your salary via the PAYE (Pay As You Earn) system.

If you enter into a salary sacrifice arrangement, your new level of earnings must remain above the National Living Wage (NLW)/National Minimum Wage (NMW). If you are paid on or near NLW/NMW, your employer will be able to offer an alternative means of applying to participate in the scheme and you will still be able to benefit through reduced cost of hire.

Does the Cyclescheme Package 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 Cyclescheme Package?

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.

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.  For this reason, Cyclescheme strongly recommends that scheme participants insure the bicycle and safety equipment as soon as they collect it from the store. 

If your bike has been stolen, please email [email protected] with the following information:

  • Date of the theft
  • Police Station Reported to
  • Crime Reference number
  • Is the bike insured?
  • Has your employer been notified?
  • Are any outstanding Salary Sacrifice reductions being taken from Net salary?
What happens if I leave employment?

If you leave employment or are made redundant during the hire period any outstanding Salary Sacrifice repayments will be taken from your final salary, from net rather than gross pay i.e. without any further tax exemptions.

For example, if you are on a 12 month scheme, and have had 4 Salary Sacrifice repayments taken from gross salary prior to leaving employment, the remaining 8 should be taken from your final net salary. If applicable, you may then be offered ownership of the equipment in the normal way (please refer to ‘End of Hire’).

Please note: It is not possible to transfer the agreement from one employer to another.

End of Hire Process Video

At Cyclescheme we make your end of hire easy. Watch the below to find out your three simple ownership options:

Contact Cyclescheme

Email: [email protected]
All enquires: 0344 879 5101
Employer sales: 01442 825 450

Contact Velorbis

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