Under the Government's Cycle to Work Initiative, employers are able to offer their workforce the opportunity to purchase a bicycle, tax free. This can result in saving s for the employee of up to 42%. The bicycle must be used mainly for commuting to and from the place of work.
The scheme involves the company buying the bike on behalf of the employee, then effectively hiring it back to them over the course of a year. The employee sacrifices part of their annual salary to cover the monthly payment, which has the effect of reducing the tax and national insurance paid by both the employee and the company. There is then a final settling up amount at the end of the year, where title to the bike passes to the employee.
Beyond Bikes are pleased to be partnered with the following companies who facilitate the cycle to work scheme, and are able to accept vouchers and or payments from them:
(1)We are one of the partnered stores for the Cranleigh School cycle to work scheme which is run through Faircare Ltd. Here's an example of how the savings work during the hire period, assuming the following:
|
Salary before scheme participation |
Salary during scheme participation |
|
| Monthly Gross Salary |
£1,200.00 |
£1,200.00 |
|
Bike value including VAT Gross salary sacrifice total |
£500.00 £500.00 |
|
|
MONTHLY GROSS SALARY SACRIFICE = £500 / 12 months (this amount appears on the hire agreement) |
£41.66 |
|
|
Monthly Gross Salary after salary sacrifice Monthly NIC contribution (12%) Monthly income tax contribution (20%) Net Salary |
£1,200.00 £144.00 £240.00 £816.00 |
£1,158.34 £139.00 £231.67 £787.67 |
| MONTHLY NET SALARY REDUCTION |
£816.00 minus £787.67= |
£28.33 |
| MONTHLY SAVING |
£41.66 minus £28.33 = |
£13.33 |
So, because the participants pay less income tax and NIC their NET salary reduction is less than the GROSS salary reduction, and this is how savings are achieved. In this example, the employee makes a £41.66 contribution to the employer, but it only costs them £28.33, resulting in a saving of £13.33 per month.
Expect to pay either 3% for bikes costing up to £500 or 5% for bikes costing over £500 at the end of the hire period.
The Green Commute Initiative is a revolutionary new Cycle to Work scheme perfect for bikes. It offers up to 42% savings on bikes for employees as part of the Government's Green Transport plan but without a £1,000 Limit!
They are FCA authorised so unlike the old fashioned C2W schemes there's no £1,000 limit. They will arrange finance for the employer to cover the cost of the bikes if required so there's no impact on employer cash-flow. The cost of the finance to the employer is covered by the saving in Employer's NICs. It's a no cost employee benefit.
There's no 7% fee to pay at the end of the scheme if employees want to own the bike, providing even better value than old fashioned C2W schemes.
