What Is the Cycle to Work Scheme?
The Cycle to Work Scheme is a government backed salary sacrifice scheme available to PAYE employees in the UK. This means the cost of a new bike and/or cycling equipment is deducted from your salary as a non-cash benefit, so you save on tax and national insurance.
Your employer buys the bike for you to ride to work and you ‘hire’ it from them. The ‘hire’ period is usually 12 or 18 months with monthly payments taken directly from your payslip before tax deductions.
As you don’t pay income tax or national insurance on the scheme payments you will save between 32% and 42% (depending on your tax band) on the overall cost of your new bike and accessories. Although your employer owns the bike, effectively it’s yours to use as you wish throughout the ‘hire’ period.
Which Cycle to Work Schemes to we partner with?
Our preferred partners are gogeta and Green Commute Iniative as they both 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 their vouchers, we do not include any surcharges, which means gogeta and Green Commute Iniative customers enjoy the best savings.
We are also authorised for the below schemes. If you are on a scheme not listed, then please get in touch with us at shop@redskybikes.co.uk and we will see if we can join the scheme.
CLICK ON ANY OF THE CYCLE TO WORK SCHEMES BELOW THAT WE OFFER TO FIND OUT MORE DETAILS:
What is the general process for the cycle to work scheme?
1. Contact your Employer
- Find out which cycle to work scheme your employer uses
- Confirm how much you can spend as this limit is set by your Employer
2. Choose your Items
- Come into store to speak to one of the team so we can help you find the right bike for you and any equipment you might want
- We can give you a quote for everything whilst you are in the shop
- Alternatively, you can go to our online shop and work out the total cost of everything
- Please note Sale Bikes are not eligible for the full Sale Discount with cycle to work vouchers. Get in touch with the store to if you are interested in one of our Sale Bikes and we can see what we can offer you
- Any problems contact us on 01845 444464 or email us shop@redskybikes.co.uk
3. Apply for your Voucher
- Submit the total value of the goods from your quote to your cycle scheme and be sure to select RedSky Bikes as your chosen retailer
- Once it’s been signed off by your Employer you will be issued with a Voucher or Certificate (the cycle schemes have different names for them)
4. Collect your Goods
- Once you are in receipt of your cycle scheme confirmation either drop us an email with a copy of it to shop@redskybikes.co.uk or pop into the shop to let us know
- Once we have the voucher confirmed we can start getting your bike all set up for you and arrange a convenient collection date
Cycle to Work Scheme FAQsWhat 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 period the 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.
RedSky Bikes offer 30 days FREE insurance with VeloLife Insurance on all new bikes to give you peace of mind in those first few days of riding. No payment details or cancellation is required!