Implementing a Cycle to Work Scheme
The Cycle to Work scheme was introduced in 1999 to help promote a healthy commute to work.
The scheme allows employers to provide (technically loan) bicycles and cyclists’ safety equipment to employees as a tax-free benefit. Where the scheme conditions are satisfied, employees can benefit from a tax and National Insurance Contributions (NICs) reduction of between 32% and 42% through a salary sacrifice arrangement; there are also possible employer NIC savings.
The cycle to work benefits only relate to the loan period, and it is commonplace for an employer or a third party bicycle provider to offer the employee the bicycle / equipment they have been using for sale after the loan period has ended. The bike may be offered to the employee for sale at a fair market value but this must be done as a separate agreement.
Planning note: Employers of all sizes across the public, private and voluntary sectors are eligible to take part in the scheme with the proviso that no employees or groups of employees are excluded. We can help you set up a scheme and advise on the subsequent sale of the bike.