Buy a Bike Using the Cycle to Work Scheme
Deers Leap Bikes are members of Cyclescheme - the scheme that makes the most of the Green Transport Plan Initiative and associated tax concessions offered by the Government.
What is this? How can it be possible to get a bike for around half price?
Under this agreement, employees who have contracts of employment that outlast the duration of the salary sacrifice (pay back) period can benefit from obtaining a tax-free bike and accessories (safety equipment). Employees must be over 18 years old and have exceeded the employer's probationary period (if applicable).
Employees must pay tax via the PAYE system.
Cyclescheme customers are not limited to any particular bike or accessory brand and therefore can choose the best for quality and value-for-money. This results in the best package of bike, accessories and safety equipment.
Cyclescheme work with Employers, under this arrangement, to ensure that Hire Agreement terms and conditions are written in full compliance with the Office of Fair Trading, Her Majesty's Revenue & Customs, Trading Standards and the Department for Transport regulations.
A salary sacrifice happens when you give up your right to receive part your pay in return for the employer's agreement to provide some form of non-cash benefit, in this case the loan of a bicycle and related equipment. A summary of the advice from the HM Revenue & Customs is available from their website at www.hmrc.gov.uk/specialist/salary_sacrifice.pdf. You are paying back the loan on your goods from gross, rather than net, pay for the hire period - hence allowing you to benefit from income tax and NI relief.
What are the actual savings?
Typical savings are 43% but the precise amount depends on your personal tax band. An individual being taxed at the higher rate will save a bit more (around 50%) than someone who pays standard rate tax. Some employers cannot reclaim VAT in the normal way so the savings are not as great, the NHS is a good example. In this case expected savings are 33 and 40%. Adding the ability to spread payments over one year still means that great savings are to be made.
It is at the discretion of the employer if they pass on the VAT saving,some employers will retain the VAT to offset any administration costs.
If the employer uses external finance to buy the bikes, then savings maybe around 5% less than quoted above but this is countered as payments are usually spread over 18 months to achieve a better borrowing rate.
Finally, the fair market value payment of around 5% needs to be taken into account to establish the total savings.
How do I do this?
Thescheme is a voucher scheme and you will need to apply for a voucher to redeem against your goods when you collect them from the bike shop. To obtain your voucher you will first need to get your employer on board with Cyclescheme. We can send them an email pack containing a contract and general details on running the scheme. Once the contract is signed,we are in a position to supply an approved employee hire agreement for you to sign at which time you are free to go to your local bike shop for a quote. When we receive a copy of this quote we will invoice your company so we can provide a secure voucher once the hire agreement is signed.
That sounds long and complicated...
Actually, just come to Deers Leap Bikes and we'll sort it out. It's much easier than it sounds, and we can contact Cyclescheme and your employer for you.You just fill out one form, and come back with your voucher to pick up your bike!
For a much more detailed explanation, everything is answered at:
www.cyclescheme.co.uk