In order to encourage healthier lifestyles and to help reduce environmental pollution the Government has introduced Cycle to Work Schemes. In addition to the health and environmental benefits of these Schemes, they also provide financial benefits to both the employer and employees.
The Cycle to Work Scheme provides the necessary documentation to allow an employer to set up a Cycle to Work scheme in order to provide employees with a bike and cycle safety accessories.
The key points are:
- The employer buys the bike and cycle safety accessories selected by the employee;
- Most employers can reclaim the VAT on the bike and accessories purchased;
- Most employers can claim capital allowances on the bike and accessories purchased;
- The employer loans the bike to the employee for an agreed period. This hire period is normally 12 to 18 months. The employee pays hire charges to the employer through a salary sacrifice arrangement for the duration of the hire period;
- As a result of the salary sacrifice arrangement the employer saves the Employers NIC (generally 12.8%) of the salary being sacrificed;
At the end of the hire period the employer can sell the bike and accessories to the employee for a nominal amount. Alternatively the employer can retain ownership of the bike and accessories and allow the employee to use the bike and accessories with no salary sacrifice.
If you would like to know how you could benefit please contact us.