Cycle to Work scheme - the employers side of things

[Dubster]

Hey all,

I'm being asked by a couple of people in the office about the possibility of the firm joining the Cycle to Work scheme. Does anyone have any experience of running the scheme from an employers point of view? Are there any pitfalls that I need to be aware of?

I have nearly 250 members of staff to look after, all based in city or town centre offices in West Yorkshire. I suspect that if we join the scheme if could be quite busy!

Many thanks

Richard

 

[trex]

As far as I am aware, any employer can offer their staff the benefits of C2W scheme, you don't have to do anything special and it does not have to cost your business anything.

1. ask employees to find the bike they want, ask for a written quote.
2. Buy the bikes, put the invoices through as plant and equipment purchase and give the bikes to employees
3. Get employees to sign a contract - ask Hatti @ woosh for a sample then modify to suit your company.
4. Deduct monthly hire cost (typically 5% of the value of the bike) from the gross pay of the employees for 12 months.

 

[GT3]

Trex is correct, there are numerous middlemen who will give the impression their involvement is required, but it is as simple as above. It is far better to administer the scheme yourself, as the employees have a free choice of bike and can negotiate discounts.

 

[Tubamanandy]

Can you explain this a bit more eg. say I buy a decent e-bike for £2K, I would then pay the company back circa £100 (5%) /month from my salary ? How long would you pay this for and what are the advantages ?

 

[trex]

the scheme is limited to £1000 bikes including any safety accessories.
If you want to buy a more expensive bike, you will need a nod and a wink from your employer, you'll need two invoices, one for the bike £1,000 including VAT that will be used for the scheme and the balance is for 'accessories' and paid for by yourself.
You won't save as much because your employer can only recover VAT and national insurance on the £1000 invoice. You still save about £400 on the £1000 portion.

 

[Electrifying Cycles]

Unless thing have changed the scheme is not limited to £1000. I previously raised the limit above this when I ran a scheme. If you are a private company you would need a consumer credit licence. However councils and other govermnent organisations do not need this. One thing to bear in mind is the amount of work required from payrol i.e. to take payments from peoples wages.

Good luck
David

 

[trex]

Unless thing have changed the scheme is not limited to £1000. I previously raised the limit above this when I ran a scheme. If you are a private company you would need a consumer credit licence. However councils and other govermnent organisations do not need this. One thing to bear in mind is the amount of work required from payrol i.e. to take payments from peoples wages.

Good luck
David

you don't need a credit licence for £1000 bikes.
Resource:
http://www.oft.gov.uk/OFTwork/credit-licensing/cycle#.UwyZ3M7N7ms

If you want to have the licence for your peace of mind, just download the
document:
http://www.oft.gov.uk/shared_oft/business_leaflets/credit_licences/c2w-licence.pdf

Department for Transport's website:
https://www.gov.uk/government/publications/cycle-to-work-scheme-implementation-guidance

 

[Electrifying Cycles]

Trex I was talking about needing a consumer credit licence if you were allowing people to pay for bikes over £1000. Only just returned to work after a virus so not 100% with it yet so apologies for not being clear. As you say quite rightly it is not required if the limit is £1000 or less.

 

[trex]

I am not sure how much salary sacrifice HMRC see as acceptable for bikes costing more than £1000. Too much and it will be treated as taxable benefit in kind.

 

[Electrifying Cycles]

I got confirmation from HMRC when I ran the scheme that it was not a problem. However this may have changed as the scheme was altered recently but I am not aware of this being the case. One thing which is important is that any cycle to work deducations do not push the persons wage below the minimum wage.

 

[103Alex1]

Is the following correct in so far as the company's corporation tax position is concerned ? :

I assume the company will get capital allowances on the plant & machinery purchases ? This could be as much as 100% in year one if they have capacity within the AIA (annual investment allowance) limits.

Presumably the rent deducted from employees is rental revenue received by the company, which would be taxable income which cancels out the capital allowances, up to the original purchase cost of the bike leaving a net neutral result.

Any 'profit' in terms of total rent deductions exceeding original bike cost would be taxable profit of the company.

Any deficit of total amounts recovered from employee (including rent and final sale cost) versus original bike cost would effectively be relievable through residual capital allowances not matched to rents or sale proceeds received.

Is that right ?

 

[trex]

I agree with your analysis.