Cycle To Work Scheme
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About Our Partner; Bike2Work Scheme
Bike2Work is a UK government tax incentive aimed at encouraging employees to cycle to work, thereby reducing air pollution and improving their general health. The scheme is already in operation and allows employees to benefit from a long term loan of a bicycle and safety equipment completely tax free.
NOTE: The Bike2Work is only valid in the UK and standard administration/handling fee of £25 for orders up to £500 and £45 for orders above £500 will be incurred on all Bike2Work Scheme transactions. This to cover the commission that we, a small independent retailer, are being charged by the cycle to work scheme partners.
The admin & handling costs are part of the payment plan and therefore do not need to be paid upfront or seperate.
All our bicycle prices are including international shipping from The Netherlands to your doorstep. For accessories a small (international) shipping cost is applicable. Please highlight any accessories you are interested in, and we will add these to your quote request.
NOTE: Bike2Work Scheme is one of the Governments Cycle To Work Scheme partners.
Her Majesty Revenue & Customs changes regarding transfer of ownership
It was never clear how to calculate a "fair market value" (fmv) when transferring the ownership. There was often confusion what this charge should be, as a result, the price employee's paid varied dramatically.In August 2010 the hmrc issued a valuation table making it very clear as to what would be an acceptable fmv. This progression is a very positive step forward. Should transfer of ownership take place at the end of a hire period, it is now very clear how to process.
What we recommend is at the end of the hire period the employee makes no payment to the employer. Instead, the employer records the fmv (as per the hmrc valuation table) as a taxable benefit on a P11D form. Therefore, the employee would be liable to pay the tax on the fair market value to the hmrc, as oppose to paying the full fmv to the employer.This option is fully compliant with the scheme guidance and offers many advantages.Should you have any questions, please call or email Bike2Work.
- Fitter, healthier and more productive staff
- Healthy staff are less likely to be absent through stress or illness
- Savings on employers NI contributions (up to 12%)
- Reduce your business carbon footprint
- Bike2work scheme administers the scheme for you at no cost to your company
- Cycling to work reduces congestion and demand for parking
- Scheme is an attractive benefit for employees
- Your company will be registered with Green Achiever and will be listed in the Green Achiever Business Directory
- Save up to 50% on the cost of a new bike and equipment
- Cost is spread over 12 monthly interest free payments
- Save money on travelling costs
- Reduce your carbon footprint
- Lose weight and tone up
- Improve your general health and well-being
- Improve mental health and help reduce stress levels
- Look good, feel great, save money and help save the planet!
How does the scheme work?
The below overview should be read in conjunction with The Department for Transport's 'Cycle to Work schemes' booklet, which is available from http://www.dft.gov.uk/pgr/sustainable/cycling/cycletoworkguidance
The Bike 2 Work Scheme can be initiated either by the employer or employee. For example, one of your employees may find out about the scheme through visiting our site, www.anddutch.co.uk, and request that you set up the scheme by using the “Bike 2 Work Scheme”. Alternatively, you may want to initiate and publicise the scheme to encourage cycling among your employees. The below gives you an overview of steps to undertake in the scheme
- Employer registers with Bike 2 Work Scheme - which is easy to do. Also an employer can register with various cycle-to-work-schemes. http://www.bike2workscheme.co.uk/signup.php or call on 0800-6122603 Please make sure to quote And Dutch Ltd.
- Employee visits us, www.anddutch.co.uk, to make their selection and obtain a written quote from us.
- Once employee receives the written quote from us (request per email:firstname.lastname@example.org or email@example.com) please download and fill out the "Quotation Form"
- As part of the "quotation form" requirement, please add our bike shop code: BKS795
- Employee provides a copy (PDF) of the filled out "Quotation Form" to firstname.lastname@example.org
- Employee presents written quotation to the employer for authorisation
- Employer provides authorisation to Bike 2 Work Scheme
- Employer makes payment to Bike 2 Work Scheme as per quotation form
- Bike 2 Work Scheme issues voucher per 1st class post to employer
- Employer to pass on voucher to employee
- Employee presents voucher to us, www.anddutch.co.uk, (a scan of the voucher send per email to email@example.com is sufficient)
- www.anddutch.co.uk provides employee their chosen bicycle/ equipment send fully boxed and assembled from The Netherlands directly to the address as indicated.
- Employee's Interest Free monthly payments commence
NOTE: The cost of your insurance can also be added to the salary sacrifice schedule. It is recommended that the employee arranges appropriate insurance to cover the bicycle/equipment against any loss or damage. Buy your bicycle insurance by the UK no 1 insurer - please click the below logo and/or find more information under our PARTNERS - Bicycle Insurance.
Salary sacrifice - Bike2Work Scheme Example
- Under his employer’s scheme, John chooses to have the loan of a bike retailing at £450.
- His employer reclaims the VAT – reducing the cost to £383
- This net amount is met by John agreeing to a salary sacrifice whereby his gross pay is reduced by £21.28 per month over 18 months. (a minimum of 12 months is required)
- The monthly net cost to John will be £14.26 because he doesn’t pay tax or national insurance on the gross pay (£21.28) that he has sacrificed.
- At the end of the 18 month period John’s employer offers the ex-loan bike for sale at a fair market price under a separate sale agreement e.g. £50. (To establish the fair market price, employers should obtain quotes from us, www.anddutch.com or other retailers as the value of the bike will partly depend on the level of use).
- The cost to John is:
- Net salary given up £14.26 x 18 months = £256.68
- Cost to buy the bike at end of the period = £50
- Total cost to John (68% of retail price) = £306.68
If you would like to know what savings you likely would receive, please click on the BIKE 2 WORK logo and go to HOW MUCH COULD I SAVE
Who is eligible for the scheme?
All company employees qualify for the scheme, providing that they are UK Taxpayers via the PAYE system and over 18 years of age. Earnings must be above the national minimum wage after the salary sacrifice has been deducted. Self-employed individuals are not permitted to participate in the scheme.
Is the scheme available to all employees?
Government guidelines state that to qualify for the tax exemption, the scheme must be offered to all employees and not just directors or to certain employees as an incentive
Who administers the scheme?
Bike 2 Work Scheme will administer the scheme on behalf of the employer. All the employer needs to do is deduct the salary sacrifice from the payroll
How do we promote the scheme to the employees?
Bike 2 Work Scheme will provide advertising literature in order for employers to promote the scheme to their employees
How are the savings made?
The scheme allows employees a tax exemption whereby they save on income tax, NI contributions and VAT* by having the cost of the bike deducted from their gross salary. Payment is to be made over 12 interest free monthly instalments
*some organisations are unable to offer VAT savings
What is a salary sacrifice?
Salary sacrifice is where an employee gives up the right to part of their pay due under his or her contract of employment. Usually, the sacrifice is made in return for the employer's agreement to provide the employee with some form of non-cash benefit
When do I start to pay?
Salary sacrifice is to commence when the employee has redeemed their voucher
Can I pay off the balance earlier?
No, the salary sacrifice period is fixed at a minimum period of 12 months
Who does the bicycle belong to?
The employer is the owner of the bicycle and the employee leases the bicycle from their employer for the duration of the salary sacrifice period
What happens when the instalment plan has ended?
The employer can offer the employee the chance to make a fair market value payment for transfer of ownership of the goods. This is to be deducted from the employee’s net salary
What happens if my employment ends?
If employment ends before the end of the scheme then the bicycle will become a taxable benefit. The remaining balance of the bicycles cost will be deducted from the employee’s final pay
What happens if I am off work?
If an employee is on leave and their monthly salary sacrifice cannot be met then the payments will be suspended until they are earning again
How much does the scheme cost to the employer?
The scheme is free of charge to set up and costs nothing to run. The employer makes the initial purchase and then leases the bicycle/equipment to the employee via a salary sacrifice until the full amount is recovered
Where can I buy my bicycle?
You can purchase your bicycle and equipment from us. Make sure you quote ‘Bike 2 Work Scheme’ when requesting your written quotation via E: firstname.lastname@example.org
Do we have to be registered for VAT to use the scheme?
You do not need to be VAT registered to run the scheme; however only VAT registered companies can pass on the VAT saving to their employees. Check with your local VAT office for eligibility information
Can the employer reclaim VAT on the purchase of the bicycle and equipment?
VAT can be reclaimed on bicycles if they are used to reduce car use, increase staff health or for the implementation of a green travel plan. Safety helmets are exempt from VAT
Do I need approval from HMRC?
You do not need prior authorisation from HMRC to take advantage of the Cycle To Work Scheme or to use a salary sacrifice to offset the cost
How much can I spend?
Up to £1000 per employee is permitted. For purchases over £1000 the employer will require a consumer credit license. The office of fair-trading has issued a license that permits employers to write hire agreements up to the value of £1000 in order to run a Cycle To Work Scheme
What equipment can I buy?
Eligible equipment includes cycles and cyclists safety equipment e.g.: cycle helmets, bells and bulb horns, lights, mirrors and mudguards, cycle clips and dress guards, luggage carriers and straps, locks and chains, pumps and repair kits and reflective clothing.
Can I buy a more expensive bicycle than the voucher value?
The limit is set at £1000. Employees are not permitted to add their own money to the purchase
Can I use my voucher to buy a bicycle for someone else?
Due to the tax exemption the bike and equipment purchased must be for personal use. The voucher is personal to the employee and non-transferable
Can I purchase more than one bicycle?
An employee can purchase more than one bike but both cannot add up to more than £1000. Both bikes must be used by the employee for journeys to and from work
What do I do if my bicycle is stolen or damaged?
It is recommended that the employee arrange appropriate insurance to cover the bicycle and equipment (see ETA link above and below)
Can I use my bicycle during my leisure time?
Yes but the equipment must mainly be used for travelling to and from the employee’s place of work. The government guidelines recommend that at least 50% of the time using the equipment should be for work related journeys
Documentation do I need to sign?
The employer will need to sign up with Bike 2 Work Scheme. Each employee will need to sign a hire purchase agreement, which sets out details of their salary sacrifice. We will provide the necessary paperwork that ensures you will comply with all the regulations
When can I collect my bicycle?
In this instance, www.anddutch.co.uk is an online retailer and therefore your bicycle will be assembled and delivered from The Netherlands to the address as indicated by yourselves.
Are there any credit-checks involved?
There are no credit-checks involved
What happens if the bicycle needs maintenance?
The employee is responsible for maintaining their bicycle (e.g.: repairs and servicing).
Buy your bicycle insurance by the UK no 1 insurer - please click the below logo and/or find more information under our PARTNERS header - Bicycle Insurance.