With the current cost of filling up a car is it time to consider purchasing a bike through the cycle to work scheme?
Do you have employees who cycle to work? If so they could take advantage of the government’s Cycle to Work Scheme.
The Cycle to Work scheme is a tax incentive aimed at encouraging employees to cycle to work thereby reducing air pollution and improving their health.
The Cycle to Work scheme permits an employer to provide bikes and/or associated safety equipment to employees tax/NI free. The employer purchases the bike and initially loans it to the employee, in exchange for a salary sacrifice by the employee over a period of time, typically 12 to 24 months. The employee then has the option to purchase the bike at the end of the loan period for a nominal sum, being the (low) market value of the now second-hand bike. The upshot is that the employee saves up to 42% of the cost of the bike (the exact saving depends on the employee’s tax rate), and the employer also saves employer’s national insurance on the salary sacrificed.
Note that the following conditions must be met:
- An employee must not, at any point during the hire period, own the bike
- At least 50% of the bike’s use must be for ‘qualifying journeys’, i.e. commuting to work
- The offer of the use of hired bikes must be made available across the whole workforce, with no groups of employees being excluded.
If you would like further information on the Cycle To Work scheme please contact us.