cycle to work scheme

Benefits for Employees

look out for a brand new bike in your pay packet!

employees

save up to 50%!

Home> Cycle To Work Scheme

Benefits for Employers

The official blurb....

To promote healthier journeys to work and to reduce environmental pollution, the Finance Act 1999 introduced an annual tax exemption permitting employers to loan cycles and cyclists' safety equipment to their employees as a tax-free benefit.

C2W (Cycle to Work scheme) encourages employees to cycle to work and allows employers to reap the benefits of a healthier workforce.

What this means is that your employer can loan you a bicycle as a tax-free benefit to you on the condition that you use your bicycle mainly to get to and from work or for work-related purposes. You can also choose to include the cost of a helmet and bicycle accessories such as helmet, lock, panniers, lights etc.

You, as the employee ‘buy’ the bike and accessories at the end of the load period for a nominal sum.

How Cycle to Work helped 'Jane':

1. Under her employer’s scheme, Jane chooses to have the loan of a bike and accessories retailing at £450

2. Her employer reclaims the VAT (at 17.5%) – reducing the cost to £383

3. This net amount is met by Jane agreeing to a salary sacrifice whereby her gross pay is reduced by £21.28 per month over 18 months

4. The monthly net cost to Jane will be £14.26 because she doesn’t pay tax or national insurance on the gross pay (£21.28) that she has sacrificed

5. At the end of the 18 month period Jane’s employer offers the ex-loan bike for sale at a fair market price

e.g. £50 (To establish the fair market price, employers should obtain quotes from local bike shops as the value of the bike will partly depend on the level of use)

6. The final cost to Jane is:

•Net salary given up £14.26 x 18 months = £256.68
•Cost to buy the bike at end of the period = £50
•Total cost to Jane (68% of retail price) = £306.68
•Saving £143.32 = 32%

The actual discount available to you will be based upon your own personal tax circumstances (if you are a higher tax payer, you’ll get a fatter discount!)

For more information, visit Bikeforall, a joint initiative of the Bicycle Association and the Association of Cycle Traders, seed-funded by the Department for Transport and supported by Cycling England.

What is C2W?

Registers for the C2W scheme

Visit approved local retailer

Bike and accessories bought

Bike and accessories delivered

Yippeee!

Equal monthly salary sacrificed over 18 months for package value less VAT.

Income Tax and N.I not paid on income foregone = further savings!

The Process

VAT claimed back from the taxman. (if VAT registered)

Your Employer

The Maths