How we Operate the scheme...

Bikes and other items are sold on Cycle Scheme are at srp, That's the manufacturers retail price no discount. So if the bike is on offer this is for out right 
purchase and not available at the discounted price through the scheme.

We only sell the current model year on the cycle scheme so only
2013 bikes are available to purchase on the scheme.

No 2011 / 2012 bikes can be purchased on the scheme 





Cyclescheme is working with a network of independent bike shops to supply the nation with quality tax free bikes and equipment for work. We have a wealth of experience organising no-hassle tax free bikes for employees. Hundreds of companies of all sizes have already benefited from our easy-to-follow system!

Coming from the cycle industry, we understand the needs of customer and bike shop, and we've made the process really simple. Employees apply for their tax free bike packages using a secure voucher and the details can be easily checked and approved online by human resources.

Partnering with independent bike shops gives employees expert advice for selection, servicing and warranty or insurance replacements. Click on a link below to see how we could help you!

Our calculator will show you the massive savings to be made through Cyclescheme. Due to operational restrictions, some companies cannot pass on the VAT saving to you and in this case you will need to use the tick box below.

From April 6, 2008 the basic rate of tax will be reduced from 22% to 20%, resulting in a slight decrease in savings through the scheme.

If your annual gross salary is between £40,000 and £42,000 your savings may be reduced due to the position of the tax and NI thresholds, as you will be paying lower rate tax (20%) and higher rate NI (1%)

Over the last two years we've been asked a question or two - mostly about fair market value! Below is a summary of the main areas of concern. We've lumped multiple questions on the same topic together to make it easier for you to learn about certain areas. If you've got a query about anything that's not covered or doesn't appear in a search then please contact us . We may well add your query to our standard FAQ list so thanks for your time in seeking our opinion.

Who are Cyclescheme?


Cyclescheme are an independent company created to help both employers and employees make the most of the Green Transport Plan Initiative and associated tax concessions offered by the Chancellor.

Cyclescheme use their industry experience and trade contacts to get you riding to work on a bike of your choice from your local preferred bike shop.

Who is entitled to use Cyclescheme?


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.

Why use Cyclescheme?


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.

What is a salary sacrifice arrangement and how are savings made?


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.

Who actually owns the bike?


The bike and goods remain the property of your employer until the hire period finishes.

If your employer buys the bikes using external finance then the finance company will own the bikes during the hire period and not your employer.


Either way, at the end of the hire period you may be given the opportunity to buy the bikes for a fair market value (plus VAT).

What happens if the bike gets stolen before it's paid for?


If the bike is stolen then the you have effectively left the scheme and need to pay all outstanding monies from your net salary. See FAQ: 'What happens if I leave my job before I've finished paying for my bike?' for more information.

It is very important to insure the bike, and any goods fitted to the bike, to safeguard against the losses following theft. You can obtain safety equipment from Cyclescheme's partnering shops, where you can ask for Home Office-approved 'Sold Secure' D-locks and cable locks to conform to insurance companies' requirements.

What happens at the end of the loan period?


It's your employer's choice whether they opt to sell you the bike at the end of the hire period. If you choose to become the owner of the goods, you may be offered the opportunity to pay the Fair Market Value for them from your net salary. Your employer needs to assess each bike separately as to its worth but in our experience the market shows values to be around 5% of the original value. If you choose not to buy the bike you will be charged the equivalent of the Fair Market Value to dispose of the goods, probably to a charity.

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 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.

Are there eligibility criteria for employees?


Yes.

The Scheme is open to all full, part-time and contract staff whose term of employment is more than the period of the loan (usually 12 months). Staff must have completed any probabtion periods if present.

To take advantage of the tax breaks that result from salary sacrifice please also note:

- You need to be a UK taxpayer via the PAYE system

- You need to be over 18 years of age to comply with Consumer Credit Act legislation

- You need to be earning more than the National Minimum Wage after your loan repayment has been deducted.

What is the payback period?


Usually 12 months with a monthly salary sacrifice but this is at the discretion of the employer.

What is the hire period?


12 months to coincide with the your salary sacrifice repayments. Early leavers need to pay all outstanding monies from their net salary and may be charged a termination fee that covers the fair market value payment (legally required to transfer the title of goods to them).

The termination fee will not exceed a value equal to the outstanding monthly salary reductions. The termination fee will be collected by your employer from any remaining net salary payments.

How often does the bike have to be used for work?


There is no requirement for you to cycle to work for a specified number of days throughout the year and there is no special requirement for you to record your trips. You can also use the bike for leisure at weekends and on holiday, although a bike purchased under Cyclescheme should be ridden for at least 50% of time during trips to work.

Does there need to be a record kept of work mileage?


The Inland Revenue does not expect you to keep a record of mileage.

Can the bike be used for local trips during the day?


Yes, you can use your bike for business purposes during the working day, although you may not claim expenses for business trips made on a bike obtained through this scheme. Employees should ensure they are covered for third party and theft during these trips.

Whose responsibility is it to insure the bike?


Yours, even though you are still paying for your bike through salary sacrifice. When you sign the hire agreement you are agreeing to insure the bike.

You should advise your insurance company that your employer has an iterest in te goods to be insured.

We recommend Cycleguard (02476 851 000) for insurance and the free services provided by Fetch (0870 460 8167). Fetch will expedite their claim and ensure that they are able to replace their bike using the bike shop of their choice.

See our web page for more information on insurance.

What's the best way to insure the bike?


Household policies are usually much cheaper than specialist policies but you must ensure that the insurer covers the bike when in storage away from your home. You also need to check that there's no upper limit on a claim (if you have a reasonably expensive bike). If your bike cannot 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. Please note that it is your right to decide which shop you use to you replace your stolen bike.

See our web page for more information on insurance.

Can a mileage allowance be claimed for business trips on the bike?


No, since the employer owns the goods you cannot claim mileage when using your Cyclescheme bike until the end of the salary sacrifice period.

Is a Consumer Credit Licence required?


The government has issued a blanket consumer credit licence to all participating employers buying bike packages up to £1000 including VAT. When you sign the Hire Agreement, the resulting relationship is defined under the terms and conditions of the Credit Consumer Act.

If your employer has a consumer credit licence in place from the home computer initiative scheme they can top-up their existing licence via the following link:


http://www.oft.gov.uk/NR/rdonlyres/A0B4926C-48BD-4F9C-9491-A89C007E000F/0/OFT731CC15_05VaryalicenceAll.pdf


Tick categories A & B.


This top-up costs are £40.


If your employer wishes to supply bikes over £1000 then they will need to buy a consumer credit licence from the OFT. takes around six weeks to come through and lasts for five years.

What happens when employees want bikes costing over £1000?


Your employer needs to apply for an individual consumer credit licence , last for 5 years and takes around six weeks to come through.

However, if your employer has decided to limit bike sales to £1000 (retail price including VAT) you can buy safety equipment in excess of this amount and pay the surplus directly to the bike shop who will make the quote out for exactly £1000.

Please note that any excess amount spent on safety equipment is not eligible for tax relief and will fall outside of the salary sacrifice scheme.

What is the fair market value payment?


A fair market value payment is the amount that a willing buyer would pay to a willing seller to purchase certain property at a particular point in time.

When is the Fair Market Value payment payable?


At the end of the 12-month hire period you might be given the opportunity to buy the bike for a fair market value. This payment is subject to 17.5% VAT.

This arrangement cannot be written within the hire agreement otherwise it would constitute a benefit in kind and therefore not be eligible for any tax savings.


Can bikes be procured via a mail order specialist?


Cyclescheme's partner shops are capable of supplying bike packages mail order from their shops, under the government's green travel plan. However, there are distinct advantages when getting a bike from your local bike shop that will be the first port of call for advice, servicing, after sales and warranty. Please note that, because of this deficiency, some mail-order specialists are not part of the Cyclescheme Partner network.

Who is responsible for maintaining the bike?


You are responsible for maintaining the bike for your own use. Your local shop will be able to advise you about necessary servicing depending on how you use your bike. They are also likely to give your bike a first free service once you have bedded it in.

We recommend Cycleguard (02476 851 000) for insurance and the free services provided by Fetch (0870 460 8167). Fetch will expedite their claim and ensure that they are able to replace their bike using the bike shop of their choice.

What happens if an employee leaves the job before they've finished paying for the bike?


Under the terms of the Hire Agreement and the Credit Consumer Act, the agreement to pay your loan is non-cancelable. This means that you will need to settle all outstanding monies before you leave. The outstanding balances will be deducted from your final net salary payment as a termination fee. Settlement will be from net pay because once you leave; you also leave the bike scheme, and are no longer eligible for tax deductions. The termination fee will not exceed a value equal to your outstanding monthly salary reductions.

For early leavers, who wish to keep the bike package, a fair market value payment (to legally transfer the title of goods) equivalent to the fair market value will be payable. The disposal fee to make good and recycle unwanted bike packages is also 5%.

If you pay for the bike package before the hire period has finished and then leave your employer you may have to pay an increased fair market value. The total of the increased fair market value, when added to your salary sacrifice payments already made, should not exceed the retail price of the bike package.

How will salary sacrifice affect out of hours payments paid on top of salary?


In calculating all other payments to you such as out of hours payments, your total unreduced pay will be used.

What happens when there is a pay award?


You will receive any relevant pay awards based on your unreduced salary

How will salary sacrifice affect pensions?


The scheme may affect your pension but this depends on your particular pension scheme. If your employer's contribution to your pension scheme is proportional to your gross earnings, these will be reduced by a salary sacrifice. It is important for you to check this out with the department which deals with pensions.

- Local Government Pension Scheme: if you contribute to LGPS your pension will not be affected as your gross salary, before salary sacrifice, is the amount that is pensionable.

- Teachers Pension Scheme: if you are within four years of your intended retirement date, you need to be aware that your pension could be affected, as the pension calculation will be made on your salary after salary sacrifice. If you are more than four years from retirement, your pension should not be affected.

- Additional Voluntary Contributions (AVCs): if you have elected to pay AVCs these could be affected by participation in this offer. You should speak to the administrator of your AVC scheme.

NB: It is likely that salary sacrifice arrangements may have only a minimal effect on the payments/benefits described above


How will salary sacrifice affect approved unpaid leave?


During approved unpaid leave such as extended maternity leave or career break, up to a maximum of six months, the Hire Agreement period may be extended by the number of months when the salary was not paid and your employer was not able to collect payments

How will salary sacrifice affect maternity, paternity, parental or sickness leave?


Your reduced income may also have an effect on the following:

Statutory maternity pay: Employees with sufficient service and who meet certain conditions may be entitled to statutory maternity payments during a portion of maternity leave which will be affected by participation in the Bikes Scheme. Although statutory maternity pay is a flat rate for part of the qualifying period, the first 6 weeks are usually paid at a rate of 90% of average weekly earnings. During this period, normal deductions will continue to be made. When you go on maternity leave, payments may be suspended until either you return or you resign from the post. If you return, payments will be restarted. If you resign, you will need to pay the balance due, as described in FAQ no: 25

During maternity/paternity/parental/adoption leave: you will continue to have the bike and equipment on loan during your absence with your gross salary still at the reduced level according to the salary sacrifice arrangements. You will continue to have deductions made from any payments you are receiving and/or will accrue a debt that will be recovered as soon as you return to work and receive a payment from your employer


What happens if an employee is made redundant or their contract is terminated?


Employees with sufficient service and who meet certain other conditions may be entitled to statutory payments on redundancy. It is possible, though unlikely, that such payments could be affected when you join the scheme.

If you leave your employer before the final deduction has been made from your salary you will be obliged to pay the remaining amount in full, without any tax exemptions as described in FAQ 25


How will salary sacrifice affect student loan payments?


Yes. Your student loan repayment is 9% of your earnings over 15k. This will alter as the trigger point is based on the salary on which you are liable to pay National Insurance Contributions (NICS). Under salary sacrifice your total gross salary on which NI is paid will reduce, so your loan repayments will reduce.


How will salary sacrifice affect Childcare Tax Credit?


Current advice from the Inland Revenue suggests that you can still apply for Childcare Tax Credit whilst being in a salary sacrifice scheme. For more information check with your Inland Revenue advice line on 0845 300 3900

How will salary sacrifice affect Working Tax Credit?


The vast majority of staff will benefit from joining the scheme. However your personal circumstances may mean that it is not beneficial. This is most likely to be the case for those on a low income affected by Working Tax Credit, which may cancel out the savings made on Income Tax and National Insurance Contributions. Please seek advice from the Inland Revenue Tax Credits helpline on 0845 300 3900

Will the reduced gross salary affect credit status, eg when applying for a mortgage?


In replying to credit reference checks we will inform companies of the situation with regard to your total remuneration package. On the grounds that you are actually better off under this scheme, it can be seen that you should not be disadvantaged. However, all lending companies are different and your employer can make no guarantees.

Do we need to inform the HMRC of our bike to work scheme?


The bike scheme is a government-sponsored initiative that has been set up so that you do not have to pay tax on items bought under the agreement. There is no need for you to contact the Inland Revenue

Is there a credit check?


There is no credit check

What happens if someone changes their mind after joining the scheme?


Under the unique terms of the scheme it is not possible for you to cancel your loan. You are therefore committed to making the salary sacrifice for the duration of the loan period. If your employment is terminated during the loan period you will still be liable to complete payments identified in the loan agreement. This means that you must be sure you are happy entering the scheme and with the selection you have made.

How much admin' is involved in running the scheme?


We are often challenged with this request and would like to sum up the admin' content as follows:


1. Your human resources department needs to check eligibility of received voucher requests

This is done via access to our secure extranet pages. These pages are an on-line replication of the quote form employees collect from the bike shops. The on-line form, complied by the employees, also asks for age and manager details. Typical eligibility criteria are:

a) Employees must be over 18

b) Employees' contracts must exceed the 12 month hire period (18 months if finance is used)

c) Employees must not fall below minimum wage after salary reductions

d) Subject to company policy employees should have completed their probation period before entering the scheme.


Depending on how automated your company records are, the above checks should take a few minutes for each employee.


2. Payroll

Salary sacrifice is part of pretty much every software pay package in existence today. If your company has run HCI or childcare vouchers then it's the same procedure, except that Cyclescheme only has to be amended at the beginning and end of the 12/18 month scheme, rather than each month as in the case of childcare vouchers. Again a few minutes work by experts in the company.


3. Transfer of goods at the end of the hire period (FMV payment)

Employees receive an invoice for 5% (+ VAT) of the retail price of the bike package at the end of the hire period. When they pay this the ownership of bike package is transferred from the employer to the employee.


4. Staff contract amendments

This is handled by our hire agreement which temporarily amends staff contracts during the hire period.

Are electric-assist bikes allowed in the scheme?


Yes, you can select electric-assist bikes in the scheme. You may need to know that, if your employer has a �1000 limit on voucher price, you cannot exceed this figure for a more expensive elctric-assist bike.

Will the partner shop be able to order my bike for me?


Bike shops can order bikes and accessories for you but may wish to either take a deposit or have any carriage fees covered to prevent them from being left with a special-order bike or paying extra carriage fees.

Any deposits taken on your credit card will be credited back when you redeem your voucher.

Please note that Cyclescheme does not insist on deposits being taken and all such transaction requests are at the discretion of the bike shop or at the request of the employee.

If an employer has an existing consumer credit licence from running the Home Computer Initiative, will this cover the bike scheme?


No, but your employer can top-up their existing licence via the following link:


http://www.oft.gov.uk/NR/rdonlyres/A0B4926C-48BD-4F9C-9491-A89C007E000F/0/OFT731CC15_05VaryalicenceAll.pdf


Tick categories A & B.


This top-up costs �40.

I work for the NHS/Charity/University. Can my employer claim back VAT on bike package purchases?


A brief explanation is that the NHS, Universities and Charities cannot in general charge VAT for their services and hence cannot reclaim it from purchases across the board of employees.

Can I buy a custom bike through the scheme?


A very small selection of Cyclescheme's partner bike shops may wish to add an administration fee to quotes for custom bikes.

This is because the profit margins on custom bikes, built in the UK, are lower than those available on standard, mass-produced bikes. The shop also has much more administration when building a custom bike as parts have to be ordered in advance and in-house builds coordinated amongst other daily work.

The administration fee is typically no more than 10 to 12% and is ONLY applicable to custom bikes.

It is worth noting that the savings from the scheme are also applied to reduce this administration fee to well below 10%.

How does Cyclescheme make its money?


Cyclescheme takes a small commission from what they pay the bike shop.

Can I obtain a second hand bike through Cyclescheme?


Cyclescheme does not allow second hand bikes to be obtained because your rights are not protecting to the same extent as with new bikes.

We are also concerned that you may not get the right size and that existing wear and tear could compromise your first year's hire during which time you are responsible for its maintenance and roadworthiness.

Your employer will also want a full warranty to be available during the hire period and it is unlikely that the partner bike shop can provide this with a used bike.

The savings on my hire agreement only show a VAT reduction - is this right?


Not totally as your income tax and national insurance contributions will also be taken from this figure. We cannot show this as Cyclescheme is not privvy to anyone's tax status and hence cannot provide full reduction amounts on the hire agreeemnt. Your easiest way to establish the exact monthly savings can be found on our website savings calculator.

The monthly payback shows no savings - just the total voucher price divided by 12. Is this right?


Fortunately not correct, you will save income tax and national insurance - even if you cannot save VAT if your employer comes from an NHS, higher education or charity background. Cyclescheme is not privvy to anyone's tax status and hence cannot provide full reduction amounts on the hire agreement. our easiest way to establish the exact monthly savings can be found on our website savings calculator.

Do I lose some of my savings if my employer finances he bikes?


Yes, if your employer borrows money in order to buy the bikes the cost of borrowing is passed on to you. In reality you will see a drop of savings of around 5% i.e. instead of getting 43% tax savings you will see around 37%. And in the case of higher rate tax payers the saving will drop from 50% to around 45%.

What is a finance scheme?


A finance scheme is when your employer borrows the money from an outside source in order to buy the bikes. Money is usually borrowed from banks.

Am I leasing or hiring the bike?


If your employer borrows the money from a bank they will do this under a lease agreement and you will effectively lease the bikes from this outside source who will own the bikes during the lease period. The hire agreement however is between you and your employer who will reduce your salary accordingly.

What happens if the bike gets damaged beyond repair during the hire hire period?


Since you can no longer cycle to work you have effectively left the scheme and you will need to pay all outstanding amounts from your net salary i.e. without any tax savings.

You will need to contact your insurance company to make a claim.