A brand new bike
at almost half the cost
We are pleased to announce
that we are now on the government run Cycle
Scheme, this is a fantastic way of getting a
Bike or Hand Cycle. Read this to find out how-
or more imoportantly get your boss to read it.
Employers are the vital link in this tax saving
chain
What is it?
Cycle to Work is the official name of the
government scheme designed to make bike ownership
financially easier for employees. It can halve
the cost of getting a machine.
The rationale is that by offering tax benefits on bike buying, it aims to minimise traffic on our crowded roads, cut back on pollution and improve public health.
The scheme first started in 1999 but was known to few. It was rebranded Cycle to Work last year.
How it works
At its simplest, Cycle to Work cuts the price
of a new bike in half if you are a higher rate
40% taxpayer and by just over 40% if you pay
income tax at the basic 22% rate.
If you are a higher rate tax payer for example,
and you choose a bike and accessories worth
£500, you enter into a Hire Agreement
with your Employer, who then deducts payments
from your gross salary over a 12 month period.
This is known as a salary sacrifice.
What is salary
sacrifice?
Salary sacrifice happens when an employee gives
up the right to receive part of their cash pay
due under their contract of employment in return
for a non cash benefit, which in this case is
a cycle and any safety equipment needed.
The Cycle
Scheme works in saving you money in
a few ways.
Firstly, your company buys the bike VAT-free.
Secondly, the bike is paid for over a period
of twelve months, with the money coming directly
from your wages. This means two things: you’re
basically getting the bike interest-free for
the length of the term repayments and you are
saving both national insurance and income tax
because the payment comes out before these are
calculated and taken.
Bike & accessories cost (including VAT)
£500 .00
V.A.T. saving £74 .47
TAX & National Insurance saving £147
.36
12 Monthly repayments (salary sacrifice) £20
.93
Total cost £251 .16
SAVING AROUND 50% OFF RRP £248 .84
The above example for a higher rate taxpayer
shows savings of over 50%, a standard rate (22%)
taxpayer would pay £285.13, saving around
43%.
Although the repayments may look higher than
you expected and total more than you expected
to save over the course of the year, the savings
calculator is actually pretty accurate.
If you calculate your net pay sacrifice over
the term of your repayments, the total is more
or less the same as on the savings
calculator because you’re paying
less tax over the year.
Who does the bike belong
to at the end of the 12 month period?
For a nominal sum (usually 5% of retail value)
the bike and safety equipment can be purchased
from the Company at the end of the Hire period.
What if I leave before
the end of the Agreement?
If you leave during the term, any outstanding
monies owed should be taken from your final
Net salary, however if this is not sufficient
to cover monies owed, you will be required to
pay your employer any outstanding money by cheque
/ cash within a specified period.
Is there a price limit
that can be spent?
Under this Initiative the Goverment has provided
a blanket Consumer Credit Licence to all participaitating
Companies, allowing purchases for any one individual
up to £1000.
How do I take part in
the scheme?
Once your Employer has signed up to the Workcycle
scheme, getting a cycle and saving money couldn’t
be easier.
Simply choose your cycle and safety equipment
and complete the online quotation form.Send
or hand the form to your employer
You then sign a written Hire Agreement for 12
months with Your employer specifying the salary
sacrifice to be made. This is regulated by the
Consumer Credit Act 1974, and is non cancellable.
Once payment has been made by the employer,
Team Hybrid will contact you when the cycle
is ready to collect.
Deductions are then made from your gross salary
by your employer over a 12 month period.
Opting in to the Cycle
Scheme is a fairly easy process (at
least for you as the employee). Just ask
your employer to sign up for the scheme,
you can then purchase a bike of your choice
from us.
Employers benefit from fitter, more
punctual, more wide-awake staff. Employees benefit
from better health and better bikes because
their money goes further.
For more information visit this site www.cyclescheme.co.uk.
