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Cycle to Work Scheme

Fed up being stuck in the car in the sunshine for that long journey to work? Would you rather be making the most of the weather?

Have you considered cycling to work?

Have you considered setting up a cycle to work scheme for you and your employees?

What is the Cycle to Work Scheme?

The Cycle to Work Scheme is a UK Government tax exemption initiative to promote healthier lifestyles whilst also reducing environmental pollution. It allows employers to loan cycles and cyclists' safety equipment to employees as a tax-free benefit.

How does it work?

There are two options for setting up a Cycle to Work Scheme:

1.Employers can loan cycles and cyclists' safety equipment to employees as a tax-free benefit.

2.A salary sacrifice arrangement Cycle to Work scheme where the employee reduces his / her salary. There must be an agreed salary sacrifice letter in place prior to the benefit starting.

There must be regulated hire agreements between the employer and the employee in place before the scheme can start.

Eligibility

1.You must offer Cycle to Work to all employees but it doesn't have to be on the same basis. You can for instance restrict the value of cycles offered to lower paid employees. As the employees enter into a hire agreement for the bikes they must at least 18 years of age to comply with the Consumer Credit Act. If they are not, a parent or guardian can sign it on their behalf.

2.If using the Salary Sacrifice approach, the reduction of the employee's salary must not take it below the National Minimum Wage. If you have employees close to the National Minimum Wage, you can run a separate scheme for them where you can limit the value of the equipment they can purchase to ensure the reduction in their salary does not take them below it.

3.It's probably best not to offer to Cycle to Work to employees until any trial period they may have has been completed. You can run as many Cycle to Work schemes as you like and as often as you like.

This is an easy benefit to set up if you have the right support. Mint Accounting can provide a Salary Sacrifice Letter and a Regulated Hire Agreement for the Employer. It is a benefit that we have found employees really value, so it is definitely worth considering as part of your benefits package!

What equipment can be included?

•A bike (including an electrically assisted pedal cycle)

•Cycle helmets which conform to European standard EN 1078

•Bells and bulb horns

•Lights, including dynamo packs

•Mirrors and mudguards to ensure riders visibility is not impaired

•Cycle clips and dress guards

•Panniers, luggage carriers and straps to allow luggage to be safely carried

•Child safety seats

•Locks and chains to ensure cycle can be safely secured

•Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs

•Reflective clothing along with white front reflectors and spoke reflectors

The Value

This is regulated lending under the Consumer Credit Act, the value (inclusive of VAT) should be restricted to £1000 to comply with the group consumer credit licence granted by the OFT to cover such agreements.

Tax Exemption

Under the employer lending scheme, ownership of the equipment does NOT pass to the employee. There is no benefit in kind payable by the employee. There is no need for the employer to include the benefit within the P11D and no payment of NIC.

The bike should mainly be used for riding back and forth to work. However, there is no requirement to keep records or logs of mileage. It should be used for journeys to and from work or other work related journeys for at least 50% of its usage.

Interested?

If you are interested in setting up the Cycle to work scheme then why not get in touch with one of our team who can provide further information on this can be done. Simply emailgetminted@mintaccounting.co.uk or if you are already a Mint client then just email your Client Manager for more information.