The Cycle to Work Scheme
The Cycle to Work Scheme is a great benefit to customers who have employers enlightened enough to offer this.
It can reduce the cost of a bike by up to 42% depending on the tax bracket that you are in and the cost can be spread over 12 months or more. It works by your employer paying for the bike (or a portion of it) and you repay your employer out of your gross pay. Until recently the amount the employer could contribute was limited to £1,000 but normally the employee can top up the difference. However, recently this £1000 limit has been lifted, which is especially helpful for e-bike of course. It is up to the employer to decide if they will increase the limit so this is a question you should ask them when applying for the scheme.
It works like this:
- Find out if your employer offers this scheme or one like it
- Visit our shop and choose a bike that you would like. We will give you a quote that you can give to your employer.
- Assuming they accept the quote they will purchase the bike from us through the ‘Cyclesheme’ and issue you with a certificate.
- Bring your certificate to the shop and we will give you the bike and any other accessories that you add into the package.,
- You will pay the cost of the bike out of your gross salary, thereby saving on the tax and national insurance, over 1 or 2 years making a saving of between 32% and 42% of the cost of the bike.
- After the repayment period your employer can sell the bike to you. This can often be for a nominal amount but could be 7% of the value of the bike.
Bike Cost of £999. Your tax rate is 20% and Employee’s National Insurance rate of 12%. Repayment period 24 months
Monthly payments : £41.62 out of gross salary. The net cost to the employee is £28.30 per month or £697.32 in total. This represents a saving of £319.68 – or 32% of the cost.
As noted above the limit of £1000 has now been removed by the government but you should ask your employer if they now allow a higher limit.
Finally please note that there is a saving to your employer as well as they do not need to pay Employer’s National Insurance on the cost of the bike.
Any questions please ask… 01483 808765.