{"id":62094,"date":"2024-04-02T16:00:00","date_gmt":"2024-04-02T14:00:00","guid":{"rendered":"http:\/\/ea37fa6d-da60-4c9b-be40-f6ab50ae761d"},"modified":"2024-04-02T16:59:50","modified_gmt":"2024-04-02T14:59:50","slug":"cycle-to-work-scheme-explained-everything-you-need-to-know-about-buying-a-tax-free-bike","status":"publish","type":"rss_feed","link":"https:\/\/c01.purpledshub.com\/cyclingplus\/rss_feed\/cycle-to-work-scheme-explained-everything-you-need-to-know-about-buying-a-tax-free-bike\/","title":{"rendered":"Cycle to Work scheme explained: everything you need to know about buying a tax-free bike"},"content":{"rendered":"

How you can grab a bike at a bargain price and get commuting <\/p>

By <\/p>

Published: Tuesday, 02 April 2024 at 14:00 PM<\/p>

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The Cycle to Work Scheme is a great way for cyclists working in the UK to save at least 32 per cent on the cost of a bike and cycling equipment.<\/p>

It\u2019s been used by more than 1.6 million commuters working for 40,000 different employers since it was introduced by the government in 1999 to promote \u201chealthier journeys to work and reduce environmental pollution\u201d.<\/p>

In this guide, we\u2019ll look at how the scheme works and whether you\u2019re eligible to buy a bike tax-free to cycle to work<\/a>.<\/p>

What is the Cycle to Work scheme?<\/h2>
The Cycle to Work Scheme is worth considering before buying a new bike. – Steve Sayers \/ Our Media<\/figcaption><\/figure>

The Cycle to Work Scheme is an employee benefit scheme set up by the government in 1999 that enables employers to \u2018hire\u2019 bikes and safety equipment to employees through salary sacrifice.<\/p>

The aim of the scheme is to get more people to commute to work by bike, promoting exercise while reducing pollution.<\/p>

How does the Cycle to Work scheme work?<\/h2>
\"Man
The Cycle to Work scheme essentially lets you get your hands on any bike you like. – Russell Burton \/ Immediate Media<\/figcaption><\/figure>

In theory, your employer buys a bike for you to ride to work on while you effectively \u2018hire\u2019 it through salary sacrifice, allowing you to save money by not paying tax and National Insurance contributions on the monthly fee \u2013 much like a company car.<\/p>

At the end of the \u2018hire\u2019 period, you will usually be able to buy the bike from your employer for a nominal fee.<\/p>

In other words, the salary sacrifice is made from your gross salary, not your net salary.<\/p>

At the beginning of the scheme, you will be given a voucher or a \u2018Letter of Collection\u2019 number that you can redeem at your local bike shop or enter online.<\/p>

\"Laptop
Employers can gain from their staff enrolling in the Cycle to Work scheme. – Dave Caudery \/ Our Media<\/figcaption><\/figure>

Because the scheme was set up with the intention of getting more people cycling to work, rather than leisure riding, your employer remains the owner of the bike once you finish the hire period.<\/p>

While it\u2019s common knowledge that in practice the employee is \u2018buying\u2019 the bike, that isn\u2019t legally the case until the salary sacrifice ends and the employer \u2018sells\u2019 the now heavily depreciated equipment to the employee.<\/p>

There is also a benefit to the employer, because they will make savings on National Insurance contributions for each employee who enters into the scheme.<\/p>

Is there a price limit for the Cycle to Work Scheme?<\/h3>
\"Pack
Most schemes are not limited, enabling you to buy virtually any bike. – Russell Burton \/ Our Media<\/figcaption><\/figure>

When the Cycle to Work Scheme first started, there was a price limit of \u00a31,000 because many of the providers were not regulated by the Financial Conduct Authority (FCA).<\/p>

These days, most providers are FCA-regulated, meaning the limit is at your employer’s discretion, with many opting to have no limit in place.<\/p>

Some employers may still have a set limit of \u00a31,000, \u00a32,000 or \u00a35,000, including safety equipment because this reduces administrative costs.<\/p>

Do I own the bike at the end of the Cycle to Work scheme?<\/h3>
\"Ribble
There are a few options on what’s next after finishing your agreement. – Steve Sayers \/ Our Media<\/figcaption><\/figure>

Because you have technically hired the bike from the scheme for the length of your agreement, you are left with a few options at the end of it:<\/p>

  1. Enter into a new agreement, paying a small deposit to rehire the bike<\/li>
  2. Buy the bike from the scheme<\/li>
  3. Give the bike back<\/li><\/ol>

    Under HMRC rules, when buying the bike back at the end of the term you need to make a one-off payment to the scheme provider.<\/p>

    This will depend on the initial value of the bike and how long you\u2019ve been using it.<\/p>

    Here\u2019s a table of the minimum value HMRC places on a used bike of different ages:<\/p>

    <\/colgroup>
    \ufeffAge of bike<\/th>If original price is less than \u00a3500<\/th>If original price is over \u00a3500<\/th><\/tr><\/thead>
    1 year<\/td>18%<\/td>25%<\/td> <\/tr>
    4 years<\/td>3%<\/td>7%<\/td> <\/tr>
    6 years or more<\/td>0%<\/td>0%<\/td> <\/tr> <\/tbody> <\/table>