Cycle to Work 2017-2018
Frequently Asked Questions
Contents
How does it all work? ................................................................................................................. 1
What is salary sacrifice? ............................................................................................................. 2
How much can I spend? ............................................................................................................. 2
What bikes are available through the Halfords cycle2work scheme? ...................................... 3
If I order a bike and it is not in stock when will the first deduction be payable? e.g. if I don’t
receive the bike until June, are the deductions still taken from April? ..................................... 3
Can I add my own money to the value of a Letter of Collection in order to get a more
expensive bike? .......................................................................................................................... 3
What equipment is available? ................................................................................................... 3
How do I know what Letter of Collection value to select? ........................................................ 4
When can I collect my bike? ...................................................................................................... 4
Who owns the equipment? ....................................................................................................... 4
Who is responsible if the cycle is stolen or damaged, and for ongoing maintenance? ............ 4
Can a Letter of Collection be used to get a bike for a family member, partner or friend? ....... 4
What happens if I do not use the bike for commuting after I have joined the scheme? ......... 4
I currently have a Company van/lease car. Am I eligible to take part in the Cycle to Work
scheme? ..................................................................................................................................... 4
Can an employee claim the HMRC cycle rate if the bike is used to travel between sites? ....... 5
What if I leave the Company or am made redundant? ............................................................. 5
What are the rules for employees who are only receiving statutory payments e.g.
maternity/sickness? ................................................................................................................... 5
What happens at the end of the loan period? .......................................................................... 5
If I select a bike this year, will I be able to participate in cycle2work next year? ..................... 5
How do I apply? ......................................................................................................................... 5
What happens next? .................................................................................................................. 6
I need help with my cycle2work application: who should I contact? ....................................... 6
How does it all work?
Within the Government’s Green Transport Plan, there’s a tax exemption which allows
employers to provide cycles and safety equipment to employees as a tax-free benefit.
The intention is that the scheme is used to provide bikes that are primarily used for
commuting to an employee’s place of work although they can clearly also be used for other
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purposes. The Inland Revenue guidance is that the cycle should be used a minimum of 50%
of the time for commuting to work (note that this does not mean that you have to commute
by bike for 50% of the year). They can also be used for part of a journey, such as cycling to
and from a railway station or between work locations.
The employer buys the bikes and safety accessories at full retail price, including VAT which is
reclaimed in the normal way, if applicable. The employer then technically hires the cycle
and accessories back to the employee, initially for a 12 month period with equal payments
being deducted from salary on either a monthly or weekly basis. The payments are
recovered from a reduction in the employee’s gross wages (salary sacrifice).
Under the Inland Revenue scheme rules it is not possible for the Company to agree in
advance to give the employee an option to purchase the cycle outright at the end of the
agreement. However the Company’s chosen scheme provider, Halfords, will contact any
participating employees after 10 months to explain the options available at that stage.
These may include an option to extend the hire period at a nominal cost.
What is salary sacrifice?
Salary sacrifice means giving up part of your salary in exchange for a non cash benefit; in this
case, the bike and safety accessories.
How much can I spend?
You can spend anything from £100 up to a maximum of £1,000 on a bike and accessories.
This can work out at as little as £5 per month.
Example savings
Employee Savings without VAT*
Retail Price
£200
£600
£1000
Basic Rate Taxpayer
20% Tax, 11% NI
Income Tax and NI Saved
£62.00
£186.00
£310.00
Net Monthly Payments
£11.50
£34.50
£57.50
Total Cost of Bike Package
£138.00
£414.00
£690.00
% Savings over 12 months
31%
31%
31%
Higher Rate Taxpayer
40% Tax, 1% NI
Income Tax and NI Saved
Net Monthly Payments
Total Cost of Bike Package
% Savings over 12 months
£82.00
£9.83
£117.96
41%
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£246.00
£29.50
£354.00
41%
£410.00
£49.16
£590.00
41%
What bikes are available through the Halfords cycle2work scheme?
Halfords have a wide range of brands in-store, online and via the UK Partner Independent
Bike Shop Network.
See the "Our Brands" section of the website.
http://www.cycle2work.info/siteadvicecentrebrand
If I order a bike and it is not in stock when will the first deduction be payable? e.g. if I
don’t receive the bike until June, are the deductions still taken from April?
The first deduction will come out in April this year, regardless of when you collect your bike.
There is however nothing to stop you reserving the bike in advance of April; this would
normally require a refundable deposit to hold the bike until your letter of collection arrives.
Can I add my own money to the value of a Letter of Collection in order to get a more
expensive bike?
No. To be eligible for the tax break, the bike must remain the sole property of the employer
for the duration of the hire period. For that reason the selected Letter of Collection must
cover the full cost of your selection (bike and accessories) and you cannot add to that.
What equipment is available?
Cycles and cyclist's safety equipment are included. The tax exemption defines a "cycle" as
"a bicycle, a tricycle or a cycle having four or more wheels, not being in any case a motor
vehicle" (192(1) of the Road Traffic Act 1988 (c52.)). An electrically assisted pedal cycle can
be included under the scheme.
Cyclists' safety equipment is not defined in the legislation and a common sense approach
should be taken when selecting it. This could include:
1. cycle helmets which conform to European standard EN 1078,
2. bells,
3. bulb horns,
4. lights including dynamo packs,
5. mirrors and mudguards to ensure the riders visibility is not impaired,
6. cycle clips,
7. dress guards,
8. panniers,
9. luggage carriers and straps to ensure luggage is carried safely,
10. locks and chains to ensure cycle can be safely secured,
11. pumps,
12. puncture repair kits, tool kits and tyre sealant to allow for minor repairs,
13. reflective clothing,
14. white front reflectors,
15. and spoke reflectors.
16. child seats
Current guidance from HMRC states that bike Satnavs and cycle computers are not allowed.
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How do I know what Letter of Collection value to select?
You should select a letter of collection value that covers the value of your chosen bike. You
can take advantage of any in store promotions or sale prices when selecting a bike from the
Halfords store network. If you are selecting a bike outside of the Halfords range which will
be sourced via the Independent Bike Dealer network, Halfords will always source the
current model of the bike at the RRP. This is to maintain consistency of price and availability
across its customer base.
When can I collect my bike?
If it is in stock at your chosen Halfords store you simply hand over your Letter of Collection
and present a form of ID. If it is not in stock, you should request that your chosen bike is
ordered in to that Halfords store. Your bike will then be built and inspected by a qualified
bike mechanic, ready for you to ride away.
Who owns the equipment?
The legislation that governs a cycle to work scheme states that the employer must own the
equipment. There can be no automatic right for the employee to own the equipment at the
end of the agreement. If they do, they cannot claim the tax exemption. Therefore a cycle to
work scheme operates as a loan: the employer is technically loaning the equipment to the
employee for a fixed-period of time. Although employees do not actually own the
equipment, they remain custodian of the equipment and are free to use it as they wish,
providing it is mainly for cycling to work.
Who is responsible if the cycle is stolen or damaged, and for ongoing maintenance?
The employee. Monthly salary deductions will continue irrespective of any loss or damage
to the cycle. You should check your home insurance details and notify your insurance
company as appropriate.
Can a Letter of Collection be used to get a bike for a family member, partner or friend?
No. The cycle must be used by you, mainly for commuting to work. For example: journeys
made between the home and workplace, or part journeys (e.g. to the station), or for
journeys between one workplace and another.
What happens if I do not use the bike for commuting after I have joined the scheme?
You will no longer qualify for the tax relief afforded to this benefit. In such circumstances
we will arrange for the remaining salary reductions to be taken from your net pay i.e. after
tax and National Insurance have been deducted. You cannot return the cycle and have your
salary re-adjusted.
I currently have a Company van/lease car. Am I eligible to take part in the Cycle to Work
scheme?
The scheme is open to all employees, however the intention that the scheme is used to
provide cycles that are primarily used for commuting to an employee’s place of work
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although they can clearly also be used for other purposes. The Inland Revenue guidance is
that the cycle should be used a minimum of 50% of the time for commuting to work (note
that this does not mean that you have to commute by bike for 50% of the year). We must
also ensure that if you are provided with a car/van by the company, the use of the cycle
should not interfere with your ability to fulfil your role.
Can an employee claim the HMRC cycle rate if the bike is used to travel between sites?
As the bike will be technically owned by the company for the duration of the scheme, the
employee can’t claim the cycle rate for the travel between sites.
What if I leave the Company or am made redundant?
If you leave before the end of the hire period, you must pay the Company the balance of the
amount still to pay and this will deducted from your final net pay. You may then have
continued use of the equipment without further payment until the hire period expires,
when you may be offered the opportunity to purchase the equipment for its then fair
market value. However this transfer of ownership is the subject of a separate agreement
and is not governed or influenced by the Hire Agreement you sign for this scheme.
If there is not enough money available in your final pay to repay the loan then the Company
will seek to recover the cost after you leave.
What are the rules for employees who are only receiving statutory payments e.g.
maternity/sickness?
Deductions will continue as normal until you start to receive only statutory payments. At
this point the deductions temporarily stop, so there will be a contribution gap. Once you
return to work, the deductions will resume for the relevant number of remaining months
until all 12 payments have been made (eg if 3 months deductions are made before they
temporarily stop, 9 months deductions are taken on your return)
What happens at the end of the loan period?
There is no automatic entitlement for you to take ownership of the cycles and safety
accessories at the end of the loan period. However, we may choose to give you the option
to purchase the equipment. For further details of the options that may be possible, see the
‘Halfords end of hire solutions’ document on the Volt.
If I select a bike this year, will I be able to participate in cycle2work next year?
If you select a bike this year, there is nothing to suggest you can’t choose another bike next
year as long as the bike you choose next year is the bike you use for work.
How do I apply?
Complete the Flexible Benefits Enrolment Form for 2017-2018, indicating your wish to
participate in the Cycle to Work Scheme. You will need to provide a contact email address
so Halfords can get in touch with you.
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You also need to confirm the amount you wish to spend on the cycle and accessories.
You can read further details of the scheme and start reviewing cycles and accessories at
https://cycle2work.secure.force.com/
What happens next?
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We will approve your application and send your details to Halfords shortly after the end
of the flexible benefits enrolment window.
Halfords will then email your hire agreement and Letter of Collection to you.
On receipt of this, you will have up to 4 March 2016 to sign your hire agreement and
print off your Letter of Collection.
You then need to take the Letter of Collection and a form of personal identification to
the Halfords store where you plan to purchase the cycle and any equipment up to the
value of the total spend.
Other arrangements can be made by ordering online or from other independent shops
via Halfords – see the website for details.
The Company will pay Halfords directly and arrange to make the salary deductions.
In around 10 months time you will be contacted by Halfords and you will be advised of
the options for the end of the 12 month hire period.
I need help with my cycle2work application: who should I contact?
Halfords are available to help you with your application, as follows:
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cycle2work helpdesk: available at 08450 778850 and [email protected]
Halfords store network: the Bikehut team at any of their stores can provide advice
on bike type, sizing and maintenance.
Halfords Head Office Bike Technician: if you would like some help matching your
specification and requirements to a bike within the Halfords range, please provide
full details to the cycle2work helpdesk. They can refer your enquiry to a Bike
Technician who can make recommendations, taking in to consideration your
requirements and budget.
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