A G Smith & Co

Cycle-to-Work Scheme

Cycle-to-Work Scheme

Posted on 01/09/2021 by Jordan Smith

Under the cycle-to-work scheme, an employer can provide a bicycle (including e-bikes) to an employee, without there being a taxable benefit (P11d etc).

Most employers administer this through an external scheme provider, and the scheme works as follows:

  • Employee chooses the bike, and the employer purchases it.
  • The employee pays for the bike through monthly instalments (12-48 months), through a salary sacrifice scheme. This means the repayments are taken from the employee’s gross salary, before tax and NIC.

Therefore, an employee who is a basic rate taxpayer will save 32% of the cost of the bike if they had purchased it outright themselves (through a 20% tax savings and a 12% NIC saving). The employer will save the 13.8% Employer’s NIC on the repayments.

The following conditions must be met:

  • At least 50% of the cycle’s use must be for commuting to work.
  • The scheme must be made available to all employees (“payrolled” employees, not self-employed individuals).
  • The employee must not own the bike at any point during the hire period.
  • Under the scheme, the employee effectively enters into a consumer hire agreement directly with the scheme provider.

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