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Cycle2Work Tax Break - Get your new bike cheaper!
Pegleg2001
Posts: 113 Forumite
in Motoring
Hi - I picked up the following info from the forum on the https://www.honestjohn.co.uk motoring website. I have bought a hybrid bike today and security items and it will save me circa £80 in VAT and tax/NI. Well worth asking your employer to comply. It won't cost them anything really and they will save a bit on the employer NI contribution too:
=========================================================
The following is an article from The Independent about the Cycle2work scheme and covers the main way it works. Hope it might encourage a few of you to get a bike if you do not have one.
Hey, boss - buy me a bike
Employees can benefit from a tax-busting way to beat the traffic
By David Prosser
Published: 28 February 2006
If the only thing stopping you cycling to work is the lack of a reliable bike, maybe it's time to speak to your boss. A little-known government scheme enables employers to offer their staff cut-price bikes at very little cost to them.
Cycle2Work was introduced in 1999 as part of the Government's Green Transport Plan. But the scheme has not been widely publicised and until recently, some particularly annoying red tape put off employers.
That's a shame, because Cycle2Work enables basic-rate taxpayers to get 40 per cent off the cost of a bike. Higher-rate taxpayers do even better, with a 50 per cent saving on offer.
The good news is that, after lobbying from cycling groups, ministers have finally agreed to make the scheme less bureaucratic.
Until recently, because Cycle2Work technically requires employers to lend the purchase price of the bike to staff, companies had to apply for a consumer credit licence before offering the scheme. Now this irritating requirement has been dropped.
"The undue bureaucracy hampering this excellent idea appears to have been overcome, so the more people who hear about it the better," says Yannick Read of the CTC, the national cyclists organisation.
The basic principle of Cycle2Work is simple. Your employer is allowed to provide you with a bike to travel to work as a tax-free benefit - you can use the bike as often as you want for leisure riding, as long as you also use it to commute.
In practice, you choose the bike you want. Your employer then buys it and leases it to you over a set period, which is typically from one to three years. At the end of this term, you can buy the bike to keep for a nominal payment, usually between 2.5 and 5 per cent of the original purchase price.
You make big savings because each monthly payment comes out of your salary before tax and National Insurance have been deducted. You can even add the cost of a lock, a helmet, reflective clothes and bike lights to the deal.
So, for example, you choose a bike costing £400, plus gear worth £100. Your employer coughs up the cash, and is entitled to reclaim the VAT on the purchases, reducing the cost to £425.
Lease the bike for a year, say, and you will pay about £35.50 a month. For a basic-rate taxpayer, making the payment out of pre-tax wages reduces the cost each month to £24, or £288 over the year. At the end of the year, you buy the bike and safety gear at 2.5 per cent of its original price - £12.50. In total, you get £500 worth of bike and kit for just £300.
The easiest way for your employer to implement Cycle2Work is through one of three providers that currently run the scheme on behalf of companies. Halfords has been involved with the scheme since the launch, but has recently been joined by Booost and Cyclescheme, which both have links to independent bike shops.
Laura Mason of Halfords says the simplified scheme rules will make Cycle2Work even more attractive. "We have in excess of 300 employers running the scheme this year," she adds. They include companies such as the Royal Mail, Lloyds TSB and Microsoft, as well as several local authorities.
Using a Cycle2Work provider should ensure employers can introduce the scheme without burdening payroll departments.
Read adds: "The financial, health and productivity benefits associated with a cycling workforce mean employer and employee stand to gain from this."
Halfords, https://www.halfordsb2b.com/home.asp
Cyclescheme, https://www.cyclescheme.co.uk/
Booost, https://www.booost.uk.com/
==================================================
Hope this helps someone.
=========================================================
The following is an article from The Independent about the Cycle2work scheme and covers the main way it works. Hope it might encourage a few of you to get a bike if you do not have one.
Hey, boss - buy me a bike
Employees can benefit from a tax-busting way to beat the traffic
By David Prosser
Published: 28 February 2006
If the only thing stopping you cycling to work is the lack of a reliable bike, maybe it's time to speak to your boss. A little-known government scheme enables employers to offer their staff cut-price bikes at very little cost to them.
Cycle2Work was introduced in 1999 as part of the Government's Green Transport Plan. But the scheme has not been widely publicised and until recently, some particularly annoying red tape put off employers.
That's a shame, because Cycle2Work enables basic-rate taxpayers to get 40 per cent off the cost of a bike. Higher-rate taxpayers do even better, with a 50 per cent saving on offer.
The good news is that, after lobbying from cycling groups, ministers have finally agreed to make the scheme less bureaucratic.
Until recently, because Cycle2Work technically requires employers to lend the purchase price of the bike to staff, companies had to apply for a consumer credit licence before offering the scheme. Now this irritating requirement has been dropped.
"The undue bureaucracy hampering this excellent idea appears to have been overcome, so the more people who hear about it the better," says Yannick Read of the CTC, the national cyclists organisation.
The basic principle of Cycle2Work is simple. Your employer is allowed to provide you with a bike to travel to work as a tax-free benefit - you can use the bike as often as you want for leisure riding, as long as you also use it to commute.
In practice, you choose the bike you want. Your employer then buys it and leases it to you over a set period, which is typically from one to three years. At the end of this term, you can buy the bike to keep for a nominal payment, usually between 2.5 and 5 per cent of the original purchase price.
You make big savings because each monthly payment comes out of your salary before tax and National Insurance have been deducted. You can even add the cost of a lock, a helmet, reflective clothes and bike lights to the deal.
So, for example, you choose a bike costing £400, plus gear worth £100. Your employer coughs up the cash, and is entitled to reclaim the VAT on the purchases, reducing the cost to £425.
Lease the bike for a year, say, and you will pay about £35.50 a month. For a basic-rate taxpayer, making the payment out of pre-tax wages reduces the cost each month to £24, or £288 over the year. At the end of the year, you buy the bike and safety gear at 2.5 per cent of its original price - £12.50. In total, you get £500 worth of bike and kit for just £300.
The easiest way for your employer to implement Cycle2Work is through one of three providers that currently run the scheme on behalf of companies. Halfords has been involved with the scheme since the launch, but has recently been joined by Booost and Cyclescheme, which both have links to independent bike shops.
Laura Mason of Halfords says the simplified scheme rules will make Cycle2Work even more attractive. "We have in excess of 300 employers running the scheme this year," she adds. They include companies such as the Royal Mail, Lloyds TSB and Microsoft, as well as several local authorities.
Using a Cycle2Work provider should ensure employers can introduce the scheme without burdening payroll departments.
Read adds: "The financial, health and productivity benefits associated with a cycling workforce mean employer and employee stand to gain from this."
Halfords, https://www.halfordsb2b.com/home.asp
Cyclescheme, https://www.cyclescheme.co.uk/
Booost, https://www.booost.uk.com/
==================================================
Hope this helps someone.
The Pegster
Quote-of-the-day: "A fool and his money were lucky to get together in the first place"
Quote-of-the-day: "A fool and his money were lucky to get together in the first place"
0
Comments
-
My employer just recently started this scheme and I applied straight away. It is great as I had thought of cycling to work but had a really old bike but wanted to get a good bike to do it but could never find the money to put aside for it.
I have just now cycled out to work (3.5 miles) for the first time and actually enjoyed it a lot.
I got a very good bike and all the lights and so on from Halfords and they where very helpful. They even threw in a 3yr service contract to make sure my bike is kept in top condition.
If you can get one on this scheme then go for it as its a great idea.0 -
My employer ran this lastyear and hopefully will do it again any time soon. Its also good because it allows people to spread the cost so they can get a good bike without having to find it in one go. My employer also runs a similar scheme for computers through PC world.0
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