The Cycle to Work Scheme: how it works

We all know that we need to make changes to contribute to a more sustainable, environmentally friendly future. In recent years, companies have worked hard to develop environmentally friendly practices.?

One initiative that has gained popularity as a way of building a greener business and reducing employees’ commuting expenses is the Cycle to Work Scheme. This programme encourages employees to choose cycling as their mode of transportation, offering financial incentives and benefits.?

In fact, the scheme has become so popular, that recent estimates suggest?82% of employers?who offer salary sacrifice schemes make it available to staff. Those using the scheme save around 133,500 tonnes of carbon dioxide a year – the emissions of a small city. The scheme is proven to be an effective way of reducing your company’s carbon footprint, whilst promoting staff wellbeing and offering financial benefits.?

In this blog post, we will explore how the Cycle to Work Scheme works and its numerous advantages for both individuals and the environment.

The Cycle to Work Scheme: what is it?

The Cycle to Work Scheme is a government initiative that allows employees to purchase a bicycle and cycling accessories through salary sacrifice. Essentially, it means you can get a bike tax-free! The scheme was introduced to promote cycling as a healthy and eco-friendly alternative to driving or taking public transport.

The Cycle to Work Scheme Explained

To participate in the Cycle to Work Scheme, an individual must be employed by a company that is registered for the programme. The employer acts as the facilitator, setting up an agreement with a third-party cycle provider. This provider could be a local bike shop, an online retailer, or a specialist cycle scheme company. The employer and the employee then enter into a salary sacrifice agreement.

Under the Cycle to Work Scheme, an employee agrees to give up a portion of their salary to cover the cost of the bicycle and accessories. This salary sacrifice is made over a fixed period, typically 12 to 18 months. The employee effectively reduces their taxable income, resulting in income tax and National Insurance contributions savings.

Once enrolled in the scheme, the employee can visit the chosen cycle provider and select a bicycle and accessories that suit their needs and preferences. The range of options available is usually vast, catering to various cycling disciplines, from road bikes to mountain bikes and everything in between. Accessories such as helmets, locks, and lights can also be included.

Cycle to Work Scheme savings

The Cycle to Work Scheme offers significant financial benefits. By participating, employees can save up to 42% of the total cost of the bike and accessories. These savings come from the reduction in income tax and National Insurance contributions. It's worth noting that the exact savings depend on the individual's tax bracket.

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Cycle to Work Scheme end of hire

At the end of the salary sacrifice period, employees have the option to purchase the bike outright. Most employers offer a fair market value purchase option, which allows the employee to take full ownership of the bicycle for a nominal fee. Alternatively, the employer may provide a continued loan or rental scheme for a further period.

Health and Environmental Benefits

Beyond the financial advantages, the Cycle to Work Scheme promotes a healthier lifestyle. Regular cycling has numerous physical and mental health benefits, including improved cardiovascular fitness, reduced stress levels, and increased productivity.?

Furthermore, cycling reduces traffic congestion and carbon emissions, contributing to a cleaner and greener environment. The scheme can form a part of a robust environmental policy for your company.?

The Cycle to Work Scheme is a win-win initiative that benefits both employees and the environment. By choosing to cycle to work, individuals can enjoy financial savings, improved health and wellbeing, and contribute to a sustainable future. Employers also benefit from a more active and motivated workforce, reduced parking demand, and a positive corporate image. So, if you've been contemplating cycling, the Cycle to Work Scheme presents a fantastic opportunity to get on two wheels while reaping numerous rewards.