Salary Sacrifice: Bicycle Scheme

Gatser

Does anyone have experience of setting up such a scheme?

We want to offer it to employees but would prefer the DIY route rather than pay out for advice and set up costs...thereby losing alot of the savings.

Thanks

Mimosa_Miminski

I looked into this scheme for my work - there are a lot of risks to the employee. Their salary is counted as reduced for the duration of the scheme - thus if they need sick pay, maternity leave, are made redundant, or (if they have a final salary pension scheme) retire or change jobs - their salary is counted as being reduced for all of these things - thus a reduction in pension, sick pay, etc...

Instead we contacted local bike shops (not chains) and negotiated a 20% discount for our employees. Basically we publicised the bike shop and in return they gave the discount when staff showed their payslip. It meant that we supported local firms, and staff got a reasonable discount with no risk

molerat

have you tried here http://www.halfordsb2b.co.uk/bikes4work-schemes.asp
Give them a ring and see what they say.

surreysaver

Mimosa_Miminski wrote: »

I looked into this scheme for my work - there are a lot of risks to the employee. Their salary is counted as reduced for the duration of the scheme - thus if they need sick pay, maternity leave, are made redundant, or (if they have a final salary pension scheme) retire or change jobs - their salary is counted as being reduced for all of these things - thus a reduction in pension, sick pay, etc...

Instead we contacted local bike shops (not chains) and negotiated a 20% discount for our employees. Basically we publicised the bike shop and in return they gave the discount when staff showed their payslip. It meant that we supported local firms, and staff got a reasonable discount with no risk

I have a salary sacrifice (for childcare vouchers). It does not affect anything else, such as pension, sick pay etc. It must depend upon the individual's contract.

Debt_Free_Chick

surreysaver wrote: »

I have a salary sacrifice (for childcare vouchers). It does not affect anything else, such as pension, sick pay etc. It must depend upon the individual's contract.

In theory, it does affect salary. Say your basic pay is £1200 a month. With salary sacrifice you are giving up some of your pay - call it £200 a month. Your basic pay then becomes £1000 a month.

If your "salary" is not affected, then your employer has added a feature so that the amount sacrificed is still counted as "salary" for certain other salary-related benefits. Read the small print very carefully to check this.

One thing that will be affected is certain benefits based on NI contributions. The amount sacrificed is definitely excluded from pay when NIC are paid, so some contribution-based benefits will be affected (unless you already earn over the UEL, which is .... erm ... about £40k pa, I think).

surreysaver

Debt_Free_Chick wrote: »

In theory, it does affect salary. Say your basic pay is £1200 a month. With salary sacrifice you are giving up some of your pay - call it £200 a month. Your basic pay then becomes £1000 a month.

If your "salary" is not affected, then your employer has added a feature so that the amount sacrificed is still counted as "salary" for certain other salary-related benefits. Read the small print very carefully to check this.

My 'salary' is reduced by the amount of childcare vouchers I receive. Therefore I pay less tax and National Insurance. Pension contributions, pension I claim at the end, overtime rates, sick pay, share contributions and everything else is unchanged.

moominyak

Gatser wrote: »

Does anyone have experience of setting up such a scheme?

I set this up for one of our employees - it was pretty straightforward.

His salary still shows on his payslip as being the full amount, but with the sacrifice part deducted underneath from his gross pay, so he pays less tax/NI, we pay less ERs NI, but his pay level is still "intact" for all other purposes.

I checked with HMRC if it was ok to do that and they said that was fine. The following links might be of use.

www.cyclescheme.co.uk

http://www.hmrc.gov.uk/specialist/sal-sac-question-and-answers.htm