Cycle to Work Scheme

Cycle to Work (Salary Sacrifice) is a simple scheme whereby an employer can provide staff with an electric bike ‘tax free’ at approximately half the retail price and at no cost to the company. This can enable employees to save up to 48% of the cost of a bike...amazing and really simple.

We work with many of the leading schemes including CycleScheme, Enjoy Benefits, Cycle Solutions and Green Communities Initiative.

Please note that Cycle to Work Scheme will incur an admin fee of up to 15% of the cost of the invoice. This is because each cycle to work scheme charges for their services. This ranges from 10-15%.

Simple steps - an example

Below are the steps you need to take if working with Green Commute Initiative. All HR departments will work with different schems but we cover many of them.

Below are the simple steps to getting your bike through cycle to work.

Step 1: Employee expresses interest in scheme and speaks to their HR Dept to gain permission to get quote. Third party finance can be arranged where necessary.

Step 2: Employee checks to see where nearest registered bike shop is. Let us know if your chosen bike shop isn’t registered with us and we will sign them up.

Step 3: Employee goes to a registered bike shop and chooses bike package. Bike shop gives price (Please ensure they will honour the price for 30 days).

Step 4: Employee fills in the form on our Instant GCI quote page (this could be done in the bike shop).

Step 5: Proforma is generated and the employee takes it to employer to be paid. Akira will make this payment where third party finance has been used.

Step 6: Salary sacrifice agreement and hire agreement are e-mailed to the employee to be e-signed. Once both documents are signed, GCI pays the bike shop via a self-invoice.

Step 7: Voucher is e-mailed to the employee so they can collect their bike. It is vital that the employee takes the voucher and photo ID with them when collecting their bike.

Step 8: GCI e-mails a copy of the salary sacrifice agreement to the employer and if applicable, an invoice paid with instructions on how to handle the VAT element.

Step 9: Employee’s salary is reduced through salary sacrifice for agreed period of time. The employer will start to repay the third party finance if used.

Step 10: After the hire agreement period ends, GCI invites the employee to enter into a free of charge loan of the bike for a further five years and nine months.

Step 11: After loan period ends, the employee makes nominal £1 payment to take title ownership of bike. Bike has no market value at this point

The Benefits

Cycle to Work in Partnership with Green Communities Initiative

The employee obtains the bike of their choice ‘tax and vat free’, by saving on the PAYE and NI contributions.
In addition the company saves the national insurance (12 .8 %) on the reduced salary whilst providing its staff with an excellent benefit that provides an efficient and environmentally friendly form of transport.
The company can treat the cost as capital expenditure and claim capital allowance in the normal manner.
The additional, and hopefully obvious, benefits include a healthier, motivated and timelier workforce who will not require costly parking facilities at work, estimated at around £2000 per space.

How does it work?

The company you work for has to set up a ‘cycle to work’ scheme*, purchases the chosen bike and ‘loans it‘ to the member of staff over a fixed period.

*For the company this means the HR department sets up a simple salary control system

The member of staff then commits to a small monthly reduction in gross salary thereby fully mitigating the cost to the employer.

The Green Transport Plan is approved by the Inland Revenue, Department for Transport, (cycle to work), and Customs and Excise.

The Small Print

Fortunately, this government inspired travel to work scheme and tax break does not involve much red tape. However there may be some ‘rules’ that may affect some companies or individuals e.g. an individual who’s salary would drop below the national minimum wage would not be eligible.

The key rule however is that the scheme and loan bike must be used mainly (51%) of the time, for travel to and from work

For example, travel between one workplace and another. Or cycling to & from the train station would qualify. We have a simple check list together with Department for Transport and HM Customs and excise information sheets that we will provide to you when you decide to enrol onto the scheme, allowing you to ensure that you satisfy the simple terms.

FAQ's about the scheme

HM Customs & Excise plus the Dept for Transport CTW scheme guidelines are quite clear that the VAT for VAT registered companies is a, recoverable, and b, not chargeable.
This should be covered in the agreement in that if an employee leaves the company before the 18 months has expired they simply settle the balance due.
The company can opt at the end of the term (not before) to transfer title to the bike at a fair market value, HM Revenue have advised that 5% + Vat of the original R.R.P. is appropriate.
As the actual salary has been reduced, then the class one national insurance due at 12.8% is reduced.
It should not adversely have any affect and can be covered in the salary sacrifice agreement.
It is recommended that the employee be responsible to ensure that the bike is properly insured (inc public liability) and maintained.
No, the Office of Fair Trading have issued an automatic ‘blanket’ licence that will cover all companies operating a legitimate cycle to work scheme. This is not a hire purchase agreement.
Yes you can add safety equipment such as helmets (recommended) lights reflective clothing, locks etc when you order the bike and include the cost in price of the bike.
The Office of Fair Trading advises that an upper value of £1000 is recommended in order to keep within the guidelines of the scheme and group consumer credit licence, however if your company has a consumer credit licence it may be able to offer a higher limit.
No, we do not charge a fee or commission to either the employer or the employee for participating in the scheme.
Great news for the company, and if the company’s cash flow looks like it will suffer then leasing can be easily arranged.

Cycle to Work Scheme

Simple steps - an example

The Benefits

How does it work?

The Small Print

FAQ's about the scheme

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