The cycle to work scheme has been with us since 1999, but with fuel prices rocketing ever upward, it’s really worth seriously considering.
The benefits employees can gain from the cycle to work scheme are apparent on many fronts.
Financial benefits include:
- By paying for the cycle from gross income as a salary sacrifice, tax and NICs are reduced. For a basic rate taxpayer, the bike will cost up to 33.25% less than its sale price and for a higher rate taxpayer up to 43.25% less. NB This may affect other benefits based on your gross income, such as pension contributions, so you just need to check that with your employer.
- Savings on car parking, fuel and maintenance of vehicles
- At the end of the hire/purchase period, the bike is yours to do with as you wish.
Environmental benefits:
- Use of a bike (even an e-bike) instead of a car or public transport reduces fossil fuels
- Smaller environmental impact in the manufacture of a bike compared to other forms of transport
- Reducing pollution and congestion.
Personal benefits:
- Improving personal health, fitness and mental health
An uphill struggle?
If you’re unsure about cycling to work, you can even use this scheme to obtain an e-bike, so it doesn’t have to be an uphill struggle. Anything that is classed as a bike is ok – mountain, road, hybrid folding.. you name it. But not e-scooters.
How does the cycle to work scheme work?
The cycle to work scheme is offered by your employer and the finer details of how the salary sacrifice is implemented can vary between employers and the cycle shops they use. If you’re interested in buying a bike through the scheme, you should discuss this directly with your employer.
If your employer does not offer the cycle to work scheme, encourage them to talk to us, because they will reap rewards too. If they are looking for a recommendation for a supplier, we’re big fans of the Green Commute Initiative who offer an interesting way for employers to sign up for the cycle to work scheme. CGI are also not restricted by the normal £1000 limit of many cycle to work schemes, which makes them popular with employees with a need for speed. Find out how they work.
Can anyone use the cycle to work scheme?
No, not if:
- your salary sacrifice takes you below the minimum wage, you will not be able to use the cycle to work scheme
- you’re self employed and do not receive your income as PAYE
Get in touch if you would like to discuss ways to reduce your income tax
