Cycle to Work

 

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How it Works

Cycle to Work schemes give employees the opportunity to buy bikes through their employers, leasing the bike for the duration of the contract and then purchasing the bike from the employer at the end of the contract agreement, giving up to 50% savings on the cost of a new bike!

The savings are achieved through a combination of business purchases being VAT exempt and then savings on Income Tax and National Insurance through salary sacrifice. Although the bike will remain the property of the business throughout the term of the contract (usually between 12 and 18 months) the bike is, for all intents and purposes, yours to take home. At the end of the contract, you are free to purchase the bike from your employer for its market value, typically a very small percentage of the initial cost.

The main providers that we work with are cyclescheme.co.uk and Halfords Cycle2Work, but we work with many others too, so check with your employer’s scheme provider to see if we are registered with them.

For Employees

  • Massive savings on the cost of a new bike – up to 50%, depending on your level of income.
  • Monthly repayments allow you to spread the cost of the bike over 12-18 months (depending on the scheme).
  • No initial down payment, your first payment is taken out of your next month’s salary (a fully refundable deposit may be required, though, if you want to secure a bike before receiving your voucher).
  • Cycling to work is both fun and a great way to improve your fitness. For Cyclescheme.co.uk applications our shop code is 'Pearsons'.

For Employers

  • A fitter, healthier team of employees, less likely to require sick leave.
  • Cycling is a proven stress-reliever, making employees more productive and better able to handle work pressures.
  • Employers also benefit from savings through reductions in National Insurance contributions.
  • Corporation tax savings are also possible, resulting in a company potentially making money through providing a cycle to work scheme.
  • Freeing up of parking spaces by employees who would otherwise have driven to work.
  • A great addition to any benefits package, promoting staff loyalty.

How much will I save?

Costs will vary depending upon the bike that you purchase and your level of income, but here is an example of the savings that you could make:

In this example, a £600 package has been purchased, consisting of a bike costing £500 and £100 worth of accessories, with repayments being made over a 12 month period.

  Basic Rate Income Tax (20%) Higher Rate Income Tax (40%)
Retail Price (incl. VAT) £600 £600
     
     
Income Tax/NI saving £186 £246
     
Monthly salary sacrifice  £34.50 £29.50
Total Cost of package £414 £354
Total Saving £186 (31%) £246 (41%)

For a better estimation on how much you could save, cyclescheme.co.uk provide a savings calculator, taking into account your salary and the amount you’d be looking to spend on a bike and accessories.

How much can I spend?

Most employers will limit you to around £1,000 to spend on a bike and accessories, but some schemes do allow you to add to this with your own money. Any additional payments you do make towards the overall cost, though, will not be eligible for any of the savings, so you will have to pay all of the extra cost.