What is the Cycle to Work scheme
The scheme helps you to save money on buying a new bike and spreads the cost of the bike, through your employer, over monthly tax-free payments. Basically it works like this
– Your place of employment registers with the scheme.
– You are then able to choose which bicycle suits you.
– Your employer will then pay for the chosen cycle.
– They will then deduct monthly instalments from your salary.
Your monthly payments for your bike are taken from your gross salary before any tax is taken. You dont pay as much tax and NI whilst you’re paying off the bike. When your scheme is finished you will have saved up to 32% of the actual bike.
With most schemes there is an end-of-scheme payment, you have actually been loaned the bike and you have to buy it at a fair market value as per HMRC. This normally is about 7%.
The Cycle To Work Scheme is easy to get and simple admin for your employer.
They also benefit financially by paying less employer NI contribution so saving approx.13% on the bikes cost.
The employer pays for the bike from you in monthly payments, and saves 13% in the process.
Enquire with your company if they are already in a scheme.
Also read about the Cycle Plus Scheme: https://www.savvycycling.co.uk/uk-employee-tax-free-cycle-purchase-schemes/cycle-plus-scheme/