Cycle to Work Schemes

If you were thinking about starting to get to work by bike, and with rapidly rising petrol costs there has never been a better time to consider it, then you should qualify for a tax incentive introduced by Government a few years ago, aimed specifically at getting more people to Cycle to Work. Government intentions are to reduce pollution and improve health at the same time :-)

• Your employer signs up for the scheme
• You then choose a bike from an approved supplier
• The bike is then bought by your employer who reclaims the VAT* (some employers, particularly NHS, Education and Charities are not registered for VAT and therefore there is no VAT saving.)
• You then take delivery of the bike for your exclusive use - provided you use it for qualifying journeys, i.e. commuting to work
• The VAT free price is then deducted from your salary by equal instalments over a period of time (typically 12 or 18 months), but as you don't pay tax or NI on the income you forego, this will give you further savings.
• After the period of salary sacrifice, the employer may give you the option to purchase the bike at a 'fair market price', though this price depends on the period you have had the cycle hired to you and its condition.

The above is taken loosely from official Department for Transport info.

"Fair Market Price" has not yet been tested but many facilitators of schemes are suggesting to employers that the fair market value is around 5%.
Cyclescheme's recommended Fair Market Value is 5% + VAT which, when you consider they experience around 12.5% accessory content in the hire agreements, equates to just under 8% (inc. VAT) FMV of the original bike price.

No. During the scheme period, your employer is hiring the bike to you for an agreed fee. At the end of the loan period it is anticipated that employers give employees the opportunity to purchase the item(s) outright for the above mentioned Fair Market Price.

This is a question we can't answer for you.

Certainly, we would recommend investigating into the scheme with your employer if the scheme is already set up.

If your employer already has a scheme in place, consider carefully whether the scheme providor (ie the facilitator your employer has chosen) can supply you with what you want and keep you serviced properly for the forseeable future. Some facilitators only offer limited ranges of bikes for you to choose from and it is possible that you might end up with an unsuitable bike just in the name of saving a few quid! False economy if you are made to compromise on the bike you get and future service levels.

Initially, download the following leaflets produced by Cycling England.

The following are Cycle to Work third-party facilitators who your employer can contact to help administer the scheme. This list is by no means exhaustive.

• Green Commute Initiative is leading the industry with its cycle-to-work scheme with no limits. GCI scheme participants benefit from no £1,000 spending cap and no scheme exit fees. Save up to 47%, depending on your tax bracket. Pay monthly through salary sacrifice with no added interest. Get an E-bike or conventional bike and help reduce congestion and pollution whilst improving your health, fitness and mental wellbeing.
  
• CYCLESCHEME Cyclescheme works with over 1000 independent partner bike shops in England, Wales, Scotland and Northern Ireland.
  There's a virtually unlimited choice of bike available and no size bar to the number of employees they'll deal with. An advanced secure site is available for administrators to manage voucher applications on-line. Supplies free custom promotional literature to larger employers
  
• CYCLE SOLUTIONS A range of over 100 brands are available, along with the latest cycle equipment. Bikes are delivered direct to employees homes. Please note: this is a single retailer and, unless you live in their locality, you are likely to receive your bike by mail order.
  
• EDINBURGH BICYCLE CO-OP Edinburgh Bicycle offers a good range of bikes and equipment and marketing back up with schemes. Has bases in Edinburgh, Aberdeen, Leeds, Newcastle-upon-Tyne and Manchester.
  
• EVANS CYCLES Evans Cycles offers a good range of bikes and equipment and has 51 stores located nationwide.
  
• HALFORDS Halfords supplies own brands of bike and other in-store makes. There are 480 stores in the UK.
  

In reality, any bike shop can offer to supply you a bike through this scheme. Many of the facilitators listed above simply act as middle-men, making the paperwork side of the process a little easier for both employers and retailers but taking a not insignificant commission for doing so (this commission is taken from the retailer, not from you!). As a result, some independent bike dealers operate independently of any of the common facilitators, so, just because they are not signed up for CycleScheme, or any of the others, does not mean that they cannot assist you in sourcing a bike to take advantage of this tax saving. CycleDream, Evans, Edinburgh Bicycle Co-Op and Cycle Solutions are all examples of independent facilitators, and there may be more out there that we don't know about.