The Cycle to Work Scheme is a UK authorities initiative began in 1999 designed to encourage extra individuals to commute by way of bicycle. It permits staff to buy bikes and equipment by means of wage sacrifice, which suggests the bike is paid for out of your pre-tax wage, leading to financial savings of as much as 42%. It was as soon as the case that the scheme was capped at £1000, which restricted individuals to entry-level bikes. However now, the federal government has expanded the scheme and made it attainable to get no matter bike, part or equipment you want underneath the brand new pointers. This contains electrical bikes. Within the final replace to the scheme in 2019 the UK Authorities acknowledged that Cycle to Work schemes “has concerned over 40,000 employers throughout the nation and has contributed to serving to greater than 1.6 million commuters cycle to work.”
How do I entry the Cycle to Work scheme?
To entry the Cycle to Work Scheme, first, test in case your employer is registered with a scheme supplier because the scheme depends in your employer facilitating the acquisition of bikes and equipment by means of wage sacrifice agreements. If they aren’t already registered you possibly can encourage your employer to affix by sharing with them the various advantages to employers, such because the financial savings on Nationwide Insurance coverage contributions, employers can save as much as 13.8% on Nationwide Insurance coverage contributions for each worker who makes use of the scheme.
Upon getting chosen your bike and know the ultimate price your employer must approve your software with the service supplier, your employer pays for the bike and also you obtain a voucher, redemption code or Letter of Assortment – relying on which supplier is getting used. This can be utilized in-store and even on-line with some retailers. The ultimate price of your bike is then deducted out of your wage over a hard and fast time period, often 12 to 18 months.
Can I purchase any bike on the Cycle to Work scheme?
If the bike can be utilized for commuting, it may be bought on the scheme
(Picture credit score: Future)
Whereas the scheme covers a variety of bicycles and equipment, the precise choices rely in your employer’s supplier and spending restrict. Usually, it contains commuter bikes, electrical bikes, and associated security gear. The scheme states that the bike must be used for commuting functions 50% of the time, in follow there isn’t any manner of this being checked up on, a motorcycle is outlined as a bicycle, tricycle or cycle having 4 or extra wheels, not being in any case a motorcar (Part 192(1) of the Highway Visitors Act 1988 (c52)). Surprisingly the scheme says you possibly can have two bikes if as an example a cycle is used at both finish of a prepare journey between house and work, nevertheless, the authorities doc does go on to say “each cycles must be used for commuting.”
How a lot can I save by way of the Cycle to Work scheme?
Financial savings by means of the Cycle to Work Scheme rely in your tax price. Usually, basic-rate taxpayers can save round 32% whereas higher-rate taxpayers can save as much as 42% on the price of a motorcycle and equipment, due to reductions in tax and Nationwide Insurance coverage contributions. Many of the suppliers we’ve got checked out have calculators on-line to indicate you precisely how a lot it can save you.
What occurs on the finish of the Cycle to Work scheme?
The Cycle to Work scheme is a rent scheme, so on the finish of the mortgage interval, you gained’t personal the equipment. On the finish of the scheme, you often have a number of choices: you possibly can return the bike, pay a good market worth to maintain it or lengthen the rental settlement. The Possession Charge shall be due on the finish of the Rent Interval. That is to keep away from tax legal responsibility and to make sure possession of the bike is easily and successfully transferred to you. You might also be capable to lengthen the mortgage settlement for one more three years for a small refundable deposit of both 3% or 7% of the equipment. You make no additional funds throughout this era. On the finish of the three years, you possibly can both return the tools and get your deposit again or preserve the equipment for no additional price. The specifics rely in your employer’s scheme supplier, so it is best to seek the advice of their pointers for exact particulars.
What if I take advantage of the Cycle to Work scheme, then depart my employer?
Should you depart your employer whereas the preliminary Cycle to Work wage sacrifice settlement continues to be in power, you’ll have to repay the steadiness and often the depreciated worth of the bike too, if you wish to preserve it. You’ve the choice to present it again to your ex-employer too. Relying in your scheme supplier, you could possibly switch your settlement to your new place of business.
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Can I get a motorcycle by way of the Cycle to Work scheme if I’m self-employed?
Self employed individuals could possibly expense a motorcycle as an organization automobile
(Picture credit score: Getty Photographs)
You can’t make use of the Cycle to Work scheme except you’re paid on the PAYE scheme so this guidelines out those that are self-employed, nevertheless, a motorcycle is an allowable enterprise expense each for working prices and the precise buy of the bike in case you are utilizing it as your organization automobile. Converse to your accountant to make certain that you’re buying your bike in the appropriate manner.
What suppliers can be found for the Cycle to Work scheme?
There are a number of suppliers for the Cycle to Work Scheme, with fashionable ones together with Cycle Scheme, Bike2Work Scheme, and Inexperienced Commute Initiative. Every supplier might supply completely different phrases, in case you are an employer seeking to be a part of a scheme it is price evaluating them to seek out the perfect match in your wants. Take into account additionally the wants of the bike store you’re buying from, some bike outlets are discovering it more and more tough to make cash from the scheme due to the excessive fee charges from among the scheme suppliers.
Paul Vousden, proprietor of Mapdec Cycle Works in Kendal, specialises in creating {custom} bikes, “Cycle to Work is a wonderful scheme in some ways. Now we have been doing an growing variety of custom-built bikes which helps prospects maximise the bike they’re getting for the cash and prevents wastage as there isn’t any have to swap out gadgets like saddles or handle-bars for patrons to get precisely the bike they want.” Nevertheless, utilizing the Cycle to Work scheme vouchers can scale back the revenue a store could make on a motorcycle, “prospects don’t at all times realise that among the cycle-to-work scheme take a fee, and what’s extra we aren’t supposed to speak about it. We frequently find yourself with very tight margins, notably if we worth matching on groupsets or parts.”
Mapdec say that to get all of the tax advantages of utilizing your Cycle to Work voucher on discounted and price-matched merchandise they should upcharge by a typical 10% to cowl the fee. Legacy choices resembling Cyclescheme, Cycle Options and Halfords Cycle2Work, cost commissions of as much as 10%. Additionally, since September 2024 bike outlets are not compelled to simply accept Cycle to Work vouchers for merchandise which can be already discounted.
There at the moment are schemes that take much less fee, Gogeta not too long ago turned the one scheme supplier to be endorsed by the Affiliation of Cycle Merchants [ACT] because it solely takes a 3% fee in a bid to offer a fairer Cycle to Work scheme that advantages everybody.
When you have any affect over the scheme your office chooses to make use of then think about encouraging them to make use of one which advantages retailers in addition to the customers of the scheme.
The place can you employ your Cycle to Work scheme vouchers?
Most native bike outlets will settle for your vouchers
(Picture credit score: GettyImages)
Your native and unbiased bike store is among the finest locations to make use of your Cycle to Work scheme voucher as they are going to be in a position that can assist you select the bike that’s finest in your wants and assist you with ongoing servicing.
Celebrating 25 years of the Cycle to Work scheme
The Affiliation of Cycle Merchants (ACT) and Cycle to Work Alliance issued a joint assertion final 12 months to have a good time 25 years of the Cycle to Work scheme and take a look at methods to enhance it for all concerned. They intention to unlock the scheme for these on low incomes, Nationwide Minimal Wage and the self-employed to make sure equitable entry to biking, and dealing with the federal government and business to simplify and minimise administrative boundaries, making it simple and engaging for organisations to supply and staff to utilise the scheme. These ambitions will hopefully make biking much more equitable and end in extra individuals benefiting from the scheme.
