Save tax by cycling to work
Cycling is becoming more popular as a method of getting to work and for almost 20 years the government have been rewarding cyclists with the Cycle To Work Scheme.
The Cycle To Work scheme is an employee benefit that saves you 26-40% on a bike and accessories. You pay nothing upfront, and the payments are taken tax efficiently from your salary by your employer (through Salary Sacrifice). This means that it is NOT a benefit in kind!
Why cycle to work?
I’m sure we are all aware that cycling to work is healthier for you than driving, but that’s rarely enough to persuade someone to actually do it. There are countless studies that show the positive effects of daily exercise on the body but there are almost as many showing huge mental benefits too.
Daily exercise is widely believed to reduce stress, alleviate symptoms of depression or anxiety and improve sleeping patterns. Research has even proven that cycling to work could slow down cognitive decline and improve memory and learning abilities.
Still not convinced? How about the monetary side of things? Cycling to work on average costs 10-20p per mile if you include depreciation of the bike, breakdown cover and a full annual service whereas using a car will likely cost 30-40p per mile (or more, with the current petrol prices!) assuming it’s a small/cheap car that will do 40mpg. That’s a huge saving before you even consider the costs of parking, congestion charges, cleaning etc.
How does it work?
If the bike costs less than £1,000 you can set up and run your own salary sacrifice scheme, or there are Cycle to Work scheme providers who can run a scheme for you. This last option it more efficient for most employers.
Scheme providers will normally:
Ensure the scheme is fully compliant with legislation
Administer the scheme for you, reducing complexity
Advise you on salary sacrifice arrangements
Help you promote the scheme to your employees.
The employer would give a voucher to the employee for the cost of the bike the employee wanted (plus any accessories). The employee is then effectively renting the bike from the employer until the end of the designated period.
Each month during this period the monthly rental will be deducted from the employee’s salary before tax and NI, so the employee is saving as well as the employer.
When the rental period ends, it’s common for ownership of the bike to pass to the employee with a small charge for the transfer.
Cycle to Work Scheme Providers
A quick internet search will show plenty of results for Cycle to Work Scheme Providers who can help you manage this for your employees, and here are some examples:
Ask for help
At Focus we are committed to helping our clients AND the environment, so as you can imagine this scheme is right up our street. If you need any help with this, just contact us and we will be happy to advise you accordingly.