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Cycle to Work schemes – save money on buying a bike and gear

Julie Rand's picture
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If your journey to work is less than about 20 miles each way, you have probably thought about getting there by bike. Not only will the journey keep you fit and healthy, you’ll probably save a fortune in fuel and fares. But of course, you’ll need a fairly robust bicycle and some equipment first.
A male and female rider commuting to work in London
Commuters in London beating the traffic

The good news is that you can also save money on these if your employer is willing to take part in the Government’s Cycle to Work scheme.

Here’s how it works:

First of all check that your employer is signed up to the scheme and/or uses a commercial company to facilitate the programme for them - in which case you may have to use a particular retailer or supplier to provide your equipment. Some of the main providers are part of  the Cycle to Work Alliance.

If your employer is not signed up to a commercial provider, they can still implement the scheme, but may have to contend with some fairly complicated paperwork. 

If they are reluctant to get involved with it, try pointing out that being a cycle-friendly employer means having a leaner, greener, healthier workforce that doesn’t rely on fossil fuel or take up spaces in the staff car park !

There was a big uptake in cycling to work by Network Rail employees after it launched in August 2012 - possibly as the result of an upsurge in interest after the Olympics?

Choosing  your machine

Next, comes the exciting bit. Visit a good bike shop that has a wide range of machines to choose from. Spend time discussing your particular needs. Will you stick to riding on main roads? Will you add in a little section of towpath or off-road track? Do you need mudguards or will you only ride to work in good weather? What about a set of lights and a rack for carrying spare clothing? Usually you are allowed to select a bicycle and ‘safety equipment’ up the value of £1,000 combined. Safety equipment can include:

  • Cycle helmets which conform to European standard EN 1078
  • Bells and bulb horns
  • Lights, including dynamo packs
  • Mirrors and mudguards
  • Cycleclips and dress guards
  • Panniers, luggage carriers and straps
  • Child safety seats
  • Locks and chains
  • Pumps, puncture repair kits, cycle tool kits and tyre sealant
  • Reflective clothing
  • White front reflectors and spoke reflectors

Do the maths

Lastly, you will then have the amount you paid for the bike and equipment deducted from your salary  - usually in roughly twelve monthly instalments. This will happen BEFORE you have paid any tax or national insurance on it. The amount you can save will depend on the rate of tax you are on and your salary but could amount up to quite a nice sum. Typical savings for employees are between 32% and 42%, meaning on average up to 40% of the total cost. However, you will have to pay VAT as well on the salary sacrifice payments. To work out how much you might save using the scheme, you can use Cyclesheme’s calculator.

.Lady riding to work in style  Ride to work in style

What’s the catch?

There isn’t really one, except  that you don’t actually own the bike and gear, even after you’ve paid back the full sum for it. This is because you technically enter into a hire agreement with your employer in order to get round the rules on taxable benefits. But in reality, nearly all employers transfer ownership of the bike to the employee as soon as the hire period is over for a nominal fee. If your employer has used an intermediary you'll usually deal directly with them. The amount you'll pay to own the bike is based on its estimated market value: HMRC has issued guidance on how this amount should be calculated.

The only other possible drawback is that the rules state that the bike should be used mainly for commuting. So forget that shiny new downhill bike – unless you work at the bottom of a mountain of course or you are Danny Hart! Oh, and you can't take part in the scheme if you are self-employed.

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