Although the Cycle to Work scheme has been around for over 20 years, there have been some changes along the way and the team at Ellis & Co often get asked about the scheme and its benefits.
Although there are many different scheme providers, the basic idea is the same: employees can save money on a new bike (and accessories) and spread the cost over monthly tax-free instalments through their employer.
The steps are:
- Employer registers with a scheme provider
- Employee picks a bike
- Employer pays for it
- Employee pays it back through monthly pre-tax instalments from payroll over the ‘hire period’
- At the end of the hire period the employee pays a small ownership fee and then owns the bike
Employees save money as the instalments are taken from their pre-tax pay. For a bike costing £1,000, a basic-rate taxpayer could save up to £320 while a higher-rate taxpayer could save up to £420.
Employers can also save by reducing their employer’s National Insurance bill.
There used to be a restriction of £1,000 on the cost of the bike plus equipment – this no longer applies. The scheme can be used by employees (including directors) but not for people who are self-employed.
There are certain other factors and conditions which must be met. If you’d like to discuss the cycle to Work scheme or you’d be keen to get on your bike please get in touch on 01244 343504 or email email@example.com.