RE-LAUNCH OF SALARY SACRIFICE BIKE TO WORK SCHEME
MAY 2017
After the considerable success of the Bike-to-Work scheme to date, the University is re-launching the
scheme in May 2017. This further extends the University’s aim of enhanced employee benefits.
Feedback indicates that there has been a high level of satisfaction with the considerable savings that
have been achieved, as well as the additional benefit of healthier journeys to work and a contribution
to reduced environmental pollution.
How does the Bike to Work scheme work?
The 1999 Finance Act introduced an annual tax exemption, which allows employers to loan cycles and
cyclists' safety equipment to employees as a tax-free benefit. The exemption was one of a series of
measures introduced under the Government's Green Transport Plan. Under this scheme, the
employee agrees to accept a lower amount of salary, in return for the employer's agreement to
provide the loan of a cycle and cyclists' safety equipment.
For example, if it is assumed that the employee is loaned equipment worth £1,000.00 over a period
of twelve months they could sacrifice £83.33 per month from their gross salary. Net of tax and NICs
this would be £57.83 for a basic rate taxpayer (20% income tax plus 10.6% NICs) and £48.33 for a
higher rate tax payer (40% income tax plus 2% NICs).
EMPLOYEE FINANCIALS
Basic Taxpayer
Higher taxpayer
Cost of hire
Hire Term
Monthly deduction
Less tax saving
Less NI saving
Monthly net reduction
Total cost after tax savings
20% tax and 10.6% NI
1,000.00
12 months
83.33
-16.67
-8.83
57.83
693.96
40% tax and 2% NI
1,000.00
12 months
83.33
-33.33
-1.67
48.33
579.96
*Table based on NI code D
Can the employee keep the cycle at the end of the loan period?
The University will transfer ownership of all bikes & equipment to Cycle-Scheme at the end of the 12
month hire period. Cycle-Scheme Ltd will then engage each staff member in a process that fully
complies with HMRC guidance in relation to the transfer of ownership between Cycle-Scheme and the
staff member.
Cycle-Scheme will provide employees with three options:
1. Purchase the bike in line with the HMRC Valuation Table guidelines after 12 months.
http://www.hmrc.gov.uk/manuals/eimanual/eim21667a.htm
2. The recommended option; sign up to an 'Extended Use Agreement' which extends the hire
period by 3 years and then purchase the bike using the HMRC Valuation Table. There will be
no further salary sacrifice deductions made via payroll after the original 12 month hire period.
3. Return the bike to Cycle-Scheme.
For more information on the transfer of ownership process you can view the FAQ section here
(http://www.cyclescheme.co.uk/employers/employer-updates/hmrc-update) or alternatively
contact Cycle-Scheme on 0844 879 5101 or [email protected].
Cycle-Guard Bicycle Insurance
It is strongly recommended that the bike you hire on the scheme is insured, as some home providers
might not cover the theft of a bike while out and about. Cycle-Guard is the recommended provider
for any cyclists looking to cover their bike and they will also offer a 15% discount to employees
participating in the scheme.
http://www.cycleguard.co.uk/
Safety Equipment Only
Due to a recent clarification from HMRC, participants in the cycle to work scheme are now able to
obtain a Certificate for safety equipment only. Perfect for employees who took part in the scheme
previously and don’t necessarily want another bike. For more information, please visit:
http://www.cyclescheme.co.uk/equipment-only
What now?
Employees can access the scheme from MONDAY 8 MAY 2017
The cut-off point for the receipt of applications is FRIDAY 19 MAY 2017