If you pay your employees through the PAYE (Pay As You Earn) system, you are eligible to participate in the Cycle to Work scheme offered by CycleScheme. CycleScheme offers employers the opportunity to encourage exercise, reduce CO2, and save money on Employers’ National Insurance Contributions.
If any of these benefits have piqued your interest, read on to find out more about CycleScheme and what exactly they can offer your company.
CycleScheme works with employers to provide their staff with reduced-price bikes, bike accessories, and the opportunity to improve fitness while reducing their carbon footprint.
It’s implemented in a few simple steps:
Go to www.cyclescheme.co.uk to register. Your account will be set up and you’ll be given access to CycleScheme’s administration tool.
Advertise the CycleScheme benefits to your staff and encourage them to sign up. CycleScheme provide free promotional material you can use to distribute within your company.
Employees have a choice of bikes and accessories from online stores and local retailers. They can apply for the package online by entering personal details and signing the Hire Agreement.
When an employee requests a Certificate, you receive an email notification, so you can confirm their eligibility and approve their request. When CycleScheme sees you’ve approved an employee request, you are sent an invoice, and as soon as that is paid, the e-Certificate is sent to your employee.
The employee arranges collection or delivery with the retailer, and CycleScheme pays for the package.
CycleScheme offers savings for both employers and employees.
Typically, an employee paying tax at the standard rate will be able to save 25% on their liabilities. Employers can save around 13.8% on the total value of salary sacrifice as they will be eligible for reduced Employers’ National Insurance Contributions.
Savings for companies of different sizes can be exemplified below:
|Company Size (people)
|Scheme take up
|Average package cost
|Company’s financial savings based on 13.8% Employers’ NICs reductions.
At the end of the hire period, employees have three options – extend, pay, or return. 94% of CycleScheme participants opt to extend, which further increases the opportunity for savings to be incurred.
Your employee may choose to:
Your employee makes a one-off deposit of either 3% or 7% of the total package value and continues to hire the bike as part of an Extended Use Agreement with CycleScheme. Though this is referred to as ‘hiring’, the employee pays nothing, and simply waits 36 months for the bike to be at its lowest market value, at which point CycleScheme transfers ownership of the bike, free of charge, to the employee.
Your employee can take ownership of the package by paying CycleScheme 18% or 25% of the package’s original value. This will reduce their savings, but they’ll be the sole owner of the bike.
Your employee can send the bike back to CycleScheme if they do not wish to take ownership of the package. Because the end of hire period procedure is so flexible, you’ll have a good chance of offering something for all your employees, regardless of their individual preferences.
Implementing the cycle to work scheme within your company means you can enjoy several benefits, including:
- A fit and healthy workforce
- Savings on expensive, top-of-the-range bikes and cycling gear
- Up to 13.8% reductions on Employers’ National Insurance Contributions (NICs)
If you think CycleScheme could benefit you and your business, visit their website FAQ page for further information. For more advice and guidance on reducing tax liabilities for your company in general, don’t hesitate to get in touch with the TWP Accounting on 01932 704 700 or email your accounting partner at firstname.lastname@example.org.