Example Poster What is the Cycle to Work scheme? Tax is complicated; the cycle to work scheme is not. Colleagues choose a bike, hire it for an agreed length of time, then snap it up for a fraction of its original value. It's like a year-rou nd sale, with interest free credit available in over 2,000 retailers nationwide. The technical bit Within the Government’s Green Transport Plan, supported by the Department for Transport (DfT) and Office of Fair Trading (OFT), there is a tax exemption that allows employers to provide cycles and safety equipment to employees as a tax-free benefit. How it works The employer buys the Cyclescheme package on behalf of the employee. The cost is then recovered from a reduction in the employee’s gross wages (via salary sacrifice). The bike is on hire during the salary sacrifice. At the end of this period the employee is given options that enable them to keep the bike whilst maintain their savings. All the documentation required to effectively manage this process is quickly and simply administered by Cyclescheme. Employees that use our recommended End of Hire agreement can expect to save a minimum of 25-35% whilst employers benefit from worthwhile National Insurance Contribution savings of up to 13.8% too. Payslip example
Salary sacrifice
Before
After
Gross annual salary
£20,000
£20,000
£1,666.66
£1,666.66
£0.00
£83.33
£1,666.66
£1,597.22
Gross monthly salary Gross Cycle to Work contribution Taxable salary Tax
20%
£333.33
£316.67
National Insurance
12%
£200.00
£190.00
£0.00
£56.67
£1,133.33
£1,076.66
Net Cycle to Work contribution Total take home pay Difference in pay
£56.67
£... I have saved a fortune. My husband and I only run one car, that alone saves approximately £700, not including petrol. I feel a cycle in all weathers does wonders and have not had a day off work in years, so that surely speaks for itself. Love arriving at work refreshed and raring to go! Jane, from South Ayrshire, Scotland
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Prices correct at time of publication.
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