What is the Tax free bike scheme?
The Tax free bike scheme was introduced by the UK Government to encourage greater participation in cycling.
The Scheme enables employers to offer their employees the opportunity to get a bike and cycling accessories via their salary.
This means the employee reduces part of their gross salary before tax, in exchange for a bike and accessories, and benefits from not paying Income Tax or National Insurance on the value of the bike and gear.
Employees can use the bike for commuting as well as for leisure.
Cycle to Work savings are typically 32% - 42% depending on your earnings.
The scheme also acts as a form of interest free loan via salary, to further improve the affordability of getting a new bike.
Neither the employer or the employee is required to keep a log of their use of the bike.
How do I join the scheme?
To start your employer must register with one of the many cycle to work schemes to make the scheme available to employees. It is not possible to have a salary sacrifice without the employer offering it.
Then use the scheme to find your chosen authorised Retailer to find your bike and cycling accessories, see how much this will cost and the total salary sacrifice amount, plus the estimated tax savings.
When you apply to join the scheme your employer will review your application, and when it is approved you will sign a salary sacrifice agreement and a hire agreement.
Your employer then notifies the cycle to work scheme and you get a voucher or certificate to redeem for your new bike from your preferred bike retailer. Happy cycling!
What bikes and cycling accessories are available?
You can get any adult bike, including electric bikes, plus a wide range of cycling equipment and clothing. You can select cycling equipment with a bike, or if you already have a bike and are cycling to work you can choose to get equipment only, with all the same tax savings.
The only cycle to work scheme purchases that are exempt are:
GPS ride trackers and navigation devices
Nutritional products / foodstuffs
Gift Vouchers
Bike racks for cars
Power meters
Turbo Trainers or Rollers
Cameras
Headphones
Childrens Bikes
Is there a limit on how much an employee can spend via the scheme?
Your employer will set the minimum and maximum scheme limits. You will be notified of these when the scheme is promoted to you.
How are the savings made?
The Tax free bike scheme savings are made by reducing your gross salary in exchange for your new bike. That’s called salary sacrifice.
By reducing your salary before tax you are not paying Income Tax or National Insurance on the amount which is the value of the voucher you want to redeem for your new bike.
So the cycle to work amount you will see in your payslip each month is before tax. The true net cost of your bike will be lower because you are not paying tax on it.
Plus don’t forget another nice benefit is the option to pay for the bike interest free through your salary.
What happens at the end of the scheme?
The tax benefits available through the Tax free bike scheme are provided on the basis that employees are hiring the equipment from their employer. This avoids the scheme becoming a benefit in kind, which would attract additional tax.
A hire agreement is supplied when the employee joins the scheme.
This agreement is between the cycle scheme and the employee, so there’s nothing employees will need to do, except to see out the hire term with no further charges or deposits.
This offers the best benefit, with no hidden transfer of ownership fees.
When the Fair Market Value of the goods becomes negligible the government insist that employees pay a fee to transfer ownership. Check with the scheme to find out what this fee is as some of the schemes will charge 3-7% of the market value. Gogeta our preferred scheme only charge a nominal fee of £1.
Employees also have the opportunity to buy the goods early or return the bike, if they wish.
How often can I join the scheme?
Your employer will decide this but it’s usually once an existing Tax free bike scheme salary sacrifice has ended.
If I work from home can I join the scheme?
Yes, if you use the bike for work related trips such as to a co-work space, to the post office or to collect work-related items.
What happens if I leave my job during the scheme?
If you leave during the salary sacrifice period your employer will deduct the outstanding balance from your final net pay.
What happens if I take maternity / paternity / adoption or sick leave?
The salary sacrifice will continue as long as your salary remains at an acceptable level to ensure affordability, and it does not drop below National Minimum Wage. Your employer will confirm this with you.
Who owns the bike?
Your Employer technically owns the bike during the term of the hire agreement.
This ensures the tax benefits are maintained.
At the end of the hire term the employee is given the option to take ownership of the bike after paying the applicable Ownership Fee.
Who is responsible for maintaining the bike?
It is the employee’s responsibility to ensure the bike is well maintained.
What happens if there is a problem with the bike?
Should there be any issues with the bike, in the first instance contact the bike supplier.
In the event of a warranty issue and subsequent replacement the bike supplier will handle this for the employee, and the scheme will continue.
Do I have to spend the full amount of my voucher in one go?
With all cycle to work schemes apart from gogeta you do have to spend the full amount in one go. However with gogeta, your voucher is flexible so you can spend the balance over different transactions with different retailers. You must spend the full value of your voucher within 12 months.
What happens if my new bike is stolen or I have an accident?
It is your responsibility to insure your bike should you wish to.
If your bike is stolen during the salary sacrifice periodthe employee remains liable for any remaining payments. If the bike is insured and replaced then the agreement continues as normal.
It's therefore worth considering getting insurance for your new bike.
Gogeta offer14 days FREE insurancewith Bikmo on all new bikes to give you peace of mind in those first few days of riding. No payment details or cancellation is required!
14 days FREE insurance with gogeta? How does it work?
Once you have completed your cycle to work voucher request, you will be given the option to register to receive an activation email from Bikmo.
This email will contain a link where you must activate your 14 days free insurancewithin 7 days of purchasing, receiving or collectingyour new bike.
No payment details or cancellation is required. It covers accidental theft and damage only, and is only valid on new bikes.
Before the 14 days free cover expires, you will receive an email from Bikmo, offering you exclusive savings on their hassle-free full policies.
Do I need insurance?
Insurance is not a requirement when buying a bike, although we would highly recommend it, as if anything happens to the bike, you (the employee) remain liable for any remaining payments.
Dedicated cycling insurance is something to consider, as it offers cover for both you and your bike. Not all home insurance covers your bike away from home, and there’s often a maximum value of bike hidden in the small print.
What if I change my mind?
There is a 14 day cooling off period after you collect the bike if you change your mind. After that the salary sacrifice agreement with your employer cannot be cancelled.
HOW DOES GOGETA VOUCHER SCHEME WORK
gogeta is not your average tax free cycling provider, they offer unbeatable value, they have swift easy admin and offer 24/7 support to employers, employees and retailers alike.
Thanks to the low cost of accepting gogeta vouchers, we do not include any surcharges, which means gogeta customers enjoy the best savings.
Maximise savings with the UK’s most generous scheme
In addition to the tax savings, gogeta enables access to Sale prices and Discounts that are not usually available to Cycle to Work buyers. Total savings are often in excess of 50%.
Never any hidden costs
Gogeta charge a 6% Platform Fee which allows gogeta to maintain their marketplace, finding you the best deals, as well as running their support teams. Unlike other cycle to work schemes it ensures that Retailers never add a Surcharge to use your voucher (even on discounted bikes).
The platform fee is applied to your salary sacrifice amount, which means you get the benefit of saving tax on this and spreading the cost. So the net effective cost is just 2.3% for a higher rate taxpayer and 2.7% for a basic rate taxpayer.
£1 Ownership Fee
As the bike is technically hired for the duration of the salary sacrifice, there needs to be ownership fee at the end to satisfy HMRC. Other schemes charge 7% of the bike price! Rest assured gogeta charges a mere £1.
Here’s a real world example with gogeta vouchers:
- You have chosen a bike that (after any available discounts) is priced at £2,500.
- You will receive a voucher for £2,500 to pay for the bike, and your total gross salary sacrifice amount will be £2,600.
- So the gogeta fee is £100 gross, £58 net (which works out at just £4.83 a month).
At the end of the agreement there’s a £1 charge to formally take ownership of the bike. Again this is a massive saving compared to the 7% that some other schemes charge. That’s it!
It’s the most tax-efficient, fairest route for everyone. You make a great overall saving on your new bike, and there are no other fees, no hidden charges.
We’re completely transparent about costs at every stage, with calculators available throughout the site to enable you to see the total costs.
HOW DOES THE GOGETA FLEXI VOUCHER WORK?
- Is it still just a single application?
Yes, you’ll complete a salary sacrifice agreement and a hire agreement when you first apply to join the scheme. We’ll then update your hire agreement with the details of what you spent your voucher on, each time you use your voucher.
- Can I spend my voucher in one go, in a single transaction?
Yes
- Is there a limit on how many times I can use my voucher?
No. You can use it as many times as you want, until you have no remaining balance. Be sure to check your account balance before using your voucher.
- What can I spend my voucher on?
A bike, clothes, lights, helmet, shoes, accessories as well as repairs and maintenance.
- If I don’t spend the full amount can I get a refund on the balance?
No. As you have entered into a salary sacrifice agreement with your employer, you are committed to the amount you selected when you applied. Any amount you do not spend will still be repaid via your salary sacrifice, so it's important to select the correct amount and then to fully spend it.
- How do I know what my voucher balance is?
Your account will always show your initial voucher amount, the deducted amount(s) and the remaining balance.
- How long is my voucher valid for?
It's for 12 months. We strongly encourage you to spend your voucher in that period. However if you don't, we can extend the expiry period.