Cyclescheme FAQ's
Who are Cyclescheme?
Cyclescheme is an independent company
created to help employers and employees make the most of the
Government's Green Transport Plan Initiative. We use our industry
experience to get you the bike you want from a local bike shop. We
are independent and can supply the right package of bike,
accessories and safety equipment for everyone.
Who can get a bike?
Employees paying PAYE, who have a
contract that outlasts the duration of the salary sacrifice period
are eligible, provided they are over 18 years old, earn more than
the National Minimum Wage after the loan repayment has been
deducted, and have completed the employer's probationary period
(if applicable).
What is salary sacrifice and how are
savings made?
With a salary sacrifice you pay back the
loan on your bike, accessories and safety equipment from gross
rather than net pay for the hire period (usually 12 months),
allowing you to benefit from income tax and NI relief.
How much can I save?
Typical savings are between 30% and 50%.,
but the actual amount you pay depends on your personal tax band,
and the way your company runs the scheme. Higher rate taxpayers
will save more, employees whose company cannot reclaim VAT (the
NHS, for example) will save less. If the employer uses external
finance (i.e. your employer borrows the money to buy the bikes
from an outside) then savings are normally about 5% lower.
Finally, the fair market value payment needs to be taken into
account when calculating the total savings.
Can I get any bike?
You can choose any bike, providing your
chosen Cyclescheme partner can supply it. Some bike shops may add
an administration fee to quotes for custom bikes, because the
profit margins are lower than those available on standard,
mass-produced models. If your employer wants to supply bikes
costing over £1000 (retail price including VAT) then they will
need a Consumer Credit License, and this costs £725, so many
employers limit the package value to £1000.
Who actually owns the bike? What happens
if it is stolen?
The bike and goods remain the property of
your employer until the hire period finishes, unless your employer
uses finance; in this case the finance company will own the bikes
during the hire period. At the end of the hire period you may be
given the opportunity to buy the bike for a fair market value
payment. If the bike gets stolen you will be liable for any
outstanding monies without any tax exemptions, so it's very
important to make sure the bike is insured. You can obtain safety
equipment, including Home Office-approved 'Sold Secure' D-locks
and cable locks, as part of the scheme.
What happens at the end of the loan
period?
Most employers opt to sell you the bike
and accessories, and you will pay the fair market value; this is
the amount that a buyer would pay to a seller to purchase the bike
and equipment. Each bike is assessed separately, but in our
experience the market shows values to be around 5% of the original
voucher value plus VAT. The fair market value cannot be stated
before or during the scheme as this could be considered a benefit
in kind as hire-purchase does not warrant any tax-relief.
What's the process of getting a tax free
bike for work through Cyclescheme?
The scheme uses a voucher system. Once
your employer has entered into a contract with Cyclescheme, you
need to sign an employee hire agreement that we supply. You visit
your local bike shop for a quote on a bike and accessories, which
you enter onto our extranet system. When we receive the quote we
will invoice your company, and provide a secure voucher once the
hire agreement is signed. You take the voucher back to the bike
shop to collect the bike.
Do I have to use the bike for work?
You can use the bike however you like; a
bike purchased under Cyclescheme should be used for work journeys
at least 50% of the time. You don't have to cycle to work for a
specified number of days throughout the year and you don't have to
record your trips or mileage. You may not claim expenses for
business trips made using the bike.
What's the best way to insure the bike?
Your Household policies are usually the
cheapest option but you must ensure that the insurer covers the
bike when in storage away from your home, and that the bike's
value doesn't exceed the upper claim limit. If the bike can't be
covered on your home insurance, we recommend Cycleguard (02476 851
000) for insurance, and the free services provided by Fetch (0870
460 8167) who will expedite your claim and ensure that you are
able to replace your bike using the bike shop of your choice.
Am I responsible for maintaining the
bike?
Yes. Your partner shop will be able to
advise you about necessary servicing depending on how you use your
bike. Many shops offer a free first service.
What happens if I leave my job or I'm
made redundant?
The agreement to pay your loan is non-cancelable,
so you will be obliged to pay the remaining amount in full,
without any tax exemptions. If you opt to take ownership of the
bike you may have to pay an increased fair market value.
Is there a credit check?
There is no credit check
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