Get Your Employer to Join the Cycle to Work Scheme
With the rising cost of transport – both in terms of your pocket and the planet – many people are now looking for greener ways to travel to work.
Some people set up a car sharing arrangement with a colleague or friend or use public transport - but what if you don’t live near another employee and the nearest train station is two miles away?
Cycle to WorkThe government’s Cycle to Work Scheme could be the ideal answer to such a situation. It lets employers set up a scheme where they “lend” employees a cycle and safety equipment as a tax-free benefit in return for a small sacrifice salary.
There are financial benefits for both sides since the employee does not pay income tax or NI on the salary deduction and the employer saves on the Employee National Insurance contribution they would be due to make on the amount.
Clearly, while the savings for a small company might be fairly small, in a larger workplace the scheme could offer major savings for the employer.
Many people who would like to travel to work in a more eco-friendly way are put off for a variety of reasons.
Some people live too far from a train station to walk each day – or their workplace is not within easy reach of a train station. Lower earners often carry on paying their bus fare to work and back because they don’t have enough cash to buy a good quality cycle and all the equipment needed.
Tax SavingsThe Cycle to Work Scheme is the answer to both of these problems. The scheme even allows an employer to make two bikes available to an employee who needs a cycle at either end of their daily train journey.
Like most tax-saving schemes there are a few rules that you need to be aware of. For example:
- Your employer can’t simply make a gift of the bike to you at the end of the loan period - although they could later allow you to buy it at a reduced price.
- If employees earn just over the minimum wage, the scheme couldn’t be used if the salary sacrifice would take their pay to less than minimum wage.
RetailersA number of major cycle retailers promote the scheme and offer help and advice to employers interested in setting up a scheme but it’s always worth checking with a number of them to ensure that you get the best deal possible.
There are limits on the total spend but in most cases you could get a quality bike and equipment, including helmet, lights and safety accessories.
The tax exemption for cycle to work schemes was set up as part of the government’s aim to reduce pollution and promote healthier living. An increase in the number of people cycling to work means less vehicles are on the road - and those cycling benefit from increased exercise.
If you work in a stressful job it can be difficult, particularly during the autumn and winter months, to find time for daily physical exercise. Often, you plan to go to the gym two nights per week but by the time you’ve fought your way through the train station, you just want to get home.
So joining the Cycle to Work scheme could provide you with the ideal solution and ensure that you always get fresh air and exercise before and after a day in a stuffy office.
Simple to Set UpIt is very easy for employers to set up a Cycle to Work Scheme, although if an employer is planning a large scale scheme, HMRC recommends that they set up a pilot project before rolling it out across the entire company.
If you think it sounds like a good idea, the first step is to approach your employer to see if they would be interested.
There are no hidden costs and most employers will actually save money since they pay less NI for every employee who joins the scheme.
MileageOne important point to make, however, is that employers are allowed to pay up to 20p per mile for cycle journeys made by staff during business hours (although not for commuting).
If you already own a bike and use it for travelling around the city for business, then you would no longer be able to claim the mileage allowance if you get a bike through the Cycle to Work Scheme.
Employers considering a scheme should think about issues such as changing areas or showers for cyclists, making secure parking available for bikes and ensuring there are lockers or secure storage for equipment.