It pays to get on your bike! | Wright Vigar

It pays to get on your bike!

 In News

One can’t help but notice the increase in the popularity of cycling in recent years: an increase in cycle commuting, world class British cyclists as household names (Hoy, Wiggins, Cavendish et al) and a surfeit of Middle Aged Men in Lycra (aka MAMILs), and the British Cycling Championships will also be held in Lincolnshire from 25-28 June 2015.

However, were you aware that the government (of either shade) can help you to buy a shiny new bike and save up to 40%? In 1999, the Cycle to Work Scheme (C2W) as it is now known, was introduced and the simple idea is that a bicycle and certain safety equipment can be ‘loaned’ tax free to an employee. The key factor is that the majority of journeys should be work related, and that includes home to work travel.

The aim of C2W is to encourage healthier journeys to work and reduce congestion. It is also beneficial as part of a wider sustainable transport initiative. Many local organisations, such as Access Lincoln, will help local employers implement sustainable travel policies and possibly grants to remove the barriers to sustainable travel.

In practical terms, most employees using C2W hire the bicycle via a salary sacrifice and this works as follows:

The employer pays for a bicycle (and helmet, lock, lights, hi-vis etc) and, if appropriate, reclaims the VAT.

The cost, including VAT, is deducted from the employee’s gross pay, typically spread over 12-18 months.

The employee saves Income Tax and National Insurance on the cost of the bike and equipment and the employer will also save on Employers National Insurance.

At the end of the ‘hire’ period (essentially whilst the employee is paying through salary deduction), the employee can choose to buy the bike from the employer at an acceptable market value, continue hiring it for free, or simply hand it back. If the employer continues to loan the bike to the employee (at no further cost) for an extended period, the acceptable market value can eventually come down to less than 2% of the original cost. It is important to agree at the outset who will maintain and insure the bike – typically this will be the employee.

There are a number of third party providers that will help you administer the scheme, including several national cycle stores, but an employer can handle the process themselves and use a local bike shop.

As with everything that comes out of a government scheme there are details that need to be observed to ensure that the scheme is effective, including National Minimum Wage considerations, consumer credit licences (if the bike costs more than £1,000) and also ensuring there is no automatic right to buy the bike at the outset.

Full information can be found by searching Cycle to Work.

If you would like any more information on this subject, please contact Jack O’Hern on 01522 531341 or email him at Jack.O’

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