A new bike in your pay packet?
For the official bit: 'Cycle to Work is the government's UK cycle scheme. It provides savings through tax breaks for employees and also financial incentives for employers to encourage people to take their bike to work, not their car.
In other words, you can save up to 50% on the cost of a bike by loaning it through your employer as a salary sacrifice. You get twice the bike for your money!
I know, I should not even be mentioning saving lots of money as no doubt everyone just loves cycling for the fun and health benefits, and we all support green transport and healthy living. Well, maybe so, but you never know who will read this and even cyclists love a good deal. (That includes me for a start!)
Explain more
I have to admit it took us in the office a little while to work out how to best explain the savings before the penny dropped (no pun) and it all made sense.
In a nutshell: the government helps to pay for your bike and safety cycling equipment.
Payments are made before NI and tax are taken out of your salary, so you only pay tax and NI on the remaining (gross) salary.
This means the whole amount goes to paying for the equipment, including the amount otherwise taken out for NI and tax. That part is the government's contribution towards your equipment.
If your employer is VAT registered, the VAT can be deducted which reduces the costs even further.
Have we still managed to confuse you? Then have a look at how this works by clicking on the table above. It shows examples and potential savings.
As you can see, the scheme means huge cost reductions and the spread payments (usually over 12 or 18 months) together make it easy to afford a bike.
If you're an employer, think of fitter staff, reduced sick leave, less car parking spaces, a 'greener' corporate image and staff who cycle to work despite traffic jams. Ok, there are of course also financial advantages such as reclaiming VAT on these purchases, reduced Employers National Insurance Contributions and claiming capital allowance on the equipment. Not a bad set of incentives.
Want to know more?
The Cycle to work information on the Tredz website lists the advantages and savings for both employers and employees, with examples for higher and for lower tax earners which can mean halving the cost of a bike.
Give us a call (01792 799508) if you want to know more or to find out how easy it is to get the scheme going.
