This is a brief outline of how the scheme works – it is a HIRE scheme rather than a purchase scheme although you are given the option to purchase the bike after 12 months.
Cycle schemes are part of the Government’s Green Transport Plan. They are “salary sacrifice” schemes (like childcare vouchers) and in addition to the tax and NI savings, there is no VAT payable on the bike purchase.
All current cycle schemes will be very similar as they must all comply with the HMRC guidance.
The current scheme we use is the Extras. Click on this Cyclescheme to set up an account.
This is a brief overview of how cycle schemes work:
- Employees can “hire” a bike and accessories through the scheme, up to the value of £1,000The Council pays for the bike and accessories and the employee makes 12 equal repayments (over 12 months) through the payroll from their gross salary. If the employee leaves before the repayment has been made in full, the outstanding balance is taken from their final pay. During this period the bike and any accessories hired are the property of the Council. After the first 12 months and after the repayment has been made in full, the ownership of the bike and accessories is automatically transferred to the scheme. The scheme will contact the employee direct at the end of the hire period (12 months) to discuss the two options below.
- The employee pays a small deposit (3 – 7% depending on the value of the equipment hired) and continues to use the bike and accessories for a further 36 months. At the end of the 36 months, if the employee does not wish to keep the bike, then the CycleScheme will refund the deposit in full. If the employee wants to keep the bike after this extended hire period, then the Cyclescheme keep the deposit and no further payments will be due. The employee will be offered ownership of the bike and accessories but will have to pay 18 – 25% of the certificate value (the original cost of the bike and accessories).