The objective of the cycle to work scheme is to modify the travel behaviour of working citizens and encourage them to use an eco-friendly means of commute, the bicycle. The employers and employees save on the taxes. The employees also save on their travel expenses. Moreover, this prevents traffic congestion during the peak office hours.
Whether you are an employer or an employee, you may benefit from the cycle scheme. However, before you opt for it, here are a few details regarding this scheme which may be of considerable help.
Which bicycle and cycling gear can you get through this scheme? There are no restrictions on the type of cycle or cycling safety gear you may choose. Whether you want a sports bike or a mountain bike, you may be able to get one from a participating bike shop. However, the availability will depend on the stock of the shop in your locality.
Is there a limit on the price of the bicycle and the cycling equipment? Yes. In this scheme, the limit on the bike package is £1000. This is as per the guidelines issued by the Office of Fair Trading. An employer may apply for their individual consumer credit license to increase this limit.
Who owns the bicycle? The employer owns the bicycle and the cycling equipment as per the scheme guidelines. The employer pays for the bike package and then rents the bicycle and the safety gear to the employees according to the terms of the salary sacrifice arrangement. The tax savings are available on this condition only.
How does the salary sacrifice work? As per the scheme, the employer pays for the bicycle and the cycling gear and rents it to the employee. The employee accepts a lowered salary in place of the use of the bicycle. The employee signs the contract agreeing to this arrangement before he/she can avail of this scheme.
How do you save money? This works in different ways for the employers and employees.
For the employer, the tax and PRSI savings are based on the number of employees availing of the scheme. Moreover, they also save on the VAT applicable on the purchase.
For the employee, the tax savings are based on the lowered salary that they accept during the hire period. Moreover, they also save on their travel expenses.
For what purpose can the bicycle be used? The cycle and cycling gear an employee obtains from the cycle to work scheme must be used for work related journeys for at least 50%. Work related journeys include commute between work and home as well as commute between one workplace to another.
What happens to the bicycle after the end of the hire period? This depends on what the employer considers suitable. They may offer the bicycle and the cycling gear to the employee at the fair market value at the end of the hire period. Also, enquire about what happens to the cycle and cycling equipment if you leave before the end of the hire period.
Alias Hamilton is an experienced supplier participating in the cycle to work scheme. He provides a few details about the way the bike scheme works. If you are looking for more details about the London cycle scheme, he suggests you to visit http://www.biketowork.co.uk/.