Cycle Plus: frequently asked questions
How much can I save?
This is an example of how savings are made for basic rate, higher rate, and additional rate tax payers on a £500 and a £1000 bike package hired over a 12 month period:
- Costs included can be used as a guide only, and may vary subject to personal taxation.
- Savings will be affected by your personal level of taxation
- Basic rate taxpayer assumes 20% Tax Rate and an employee NIC rate of 10.6%
- Higher rate taxpayer assumes 40% Tax Rate and an Employee NIC rate of 2%
- Additional rate taxpayer assumes 50% Tax Rate and an Employee NIC rate of 2%
After the hire period has ended, under a separate agreement, the ownership may be transferred to the hirer for a fair market value payment. The fair market value payment needs to be taken into account to establish the total savings.
Who are Cyclescheme?
Cyclescheme are an independent company created to help both employers and employees make the most of the Green Transport Plan Initiative and associated tax concessions offered by the Chancellor. Cyclescheme use their industry experience and trade contacts to get you riding to work on a bike of your choice from your local preferred bike shop.
Are there any other eligibility criteria for employees?
The Scheme is open to all full and part-time staff whose term of employment is more than the period of the hire (12 months) provided that you do not earn less than the Pay Protection Limit (see Benefits Plus: frequently asked questions), or your earnings would fall below the National Minimum Wage.
To take advantage of the tax savings that result from Cycle Plus please also note that:
- You need to be a UK taxpayer via the PAYE system
- You need to be over 18 years of age to comply with Consumer Credit Act legislation*
- It is not possible to take part in both parking plus and cycle plus simultaneously
*For those under 18 years of age alternative arrangements will apply.
Why has the University selected Cyclescheme to facilitate Cycle Plus?
Cyclescheme customers are not limited to any particular bike or accessory brand and therefore can choose the best for quality and value-for-money from local bike suppliers. This results in the best package of bike, accessories and safety equipment.
What is the hire period?
The hire period of Cycle plus lasts for a period of 12 months.
How Cycle Plus works
To take part in Cycle Plus you must agree to a reduction in your salary over a fixed period (12 months) equal to the cost, to the University, of providing the bike and equipment selected. You do not pay tax or National Insurance on this benefit.
Please note that although you do not have legal ownership of the equipment during the 12 month hire agreement it will be your responsibility to adequately insure the bicycle.
If you were to cease employment before the end of the hire agreement, the outstanding balance will be repayable immediately and, if possible, it will be deducted from your last net salary payment. This means that you will not get Tax and National Insurance savings on any outstanding balance.
Ownership: who actually owns the bike?
The bike and goods remain the property of the University.
What happens at the end of the 12 month hire period?
Once the hire period is finished you will be given the opportunity to continue the loan of the bicycle and equipment, without further cost to you. You may be given the opportunity to transfer ownership of the bike to you or buy the bike for a fair market value.
The fair market value can only be established at the end of the loan period and therefore cannot be stated before or during the scheme.
What is the fair market value payment?
A fair market value payment is the amount that a willing buyer would pay to a willing seller to purchase certain property at a particular point in time. Her Majesty’s Revenue & Customs (HMRC) provides guidance on the calculation of fair market values when ownership transfers. This can be viewed at http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm
How often does the bike have to be used for work?
There is no requirement for you to cycle to work for a specified number of days throughout the year and there is no special requirement for you to record your trips. You can also use the bike for leisure at weekends and on holiday, although a bike provided through Cycle Plus should be ridden for at least 50% of your trips to work.
Does there need to be a record kept of work mileage?
The HM Revenue & Customs does not expect you to keep a record of mileage.
Can the bike be used for local trips during the day?
Yes, you can use your bike for business purposes during the working day, although you may not claim expenses for business trips made on a bike obtained through this scheme. Employees should ensure they are insured for third party and theft during these trips.
Can a mileage allowance be claimed for business trips on the bike?
No, since the University owns the goods you cannot claim mileage when using your Cycle Plus bike while it remains the property of the University.
Whose responsibility is it to insure the bike?
Yours, even though it is the property of the University you have the responsibility to insure the bike and by signing the hire agreement you are agreeing to do this.
You should advise your insurance company that your employer has an interest in the goods to be insured.
What’s the best way to insure the bike?
Household policies are usually much cheaper than specialist policies but you must ensure that the insurer covers the bike when in storage away from your home. You also need to check that there’s no upper limit on a claim (if you have a reasonably expensive bike).
Cyclescheme recommend Cycleguard, www.cyclecuard.co.uk and cyclescheme participants can get a discount.
See Cyclescheme website [www.cyclescheme.co.uk] for more information on insurance.
What happens if the bike gets stolen while I am participating in Cycle Plus before it’s paid for?
If the bike is stolen then you have effectively left the scheme and need to pay all outstanding monies from your net salary. See FAQ: ‘What happens if I leave my job before I’ve finished paying for my bike?’ for more information.
It is very important to insure the bike, and any goods fitted to the bike, to safeguard against the losses following theft. You can obtain safety equipment from Cyclescheme’s partnering shops, where you can ask for Home Office-approved ‘Sold Secure’ D-locks and cable locks to conform to insurance companies’ requirements.
Who is responsible for maintaining the bike?
You are responsible for maintaining the bike for your own use. Your local shop will be able to advise you about necessary servicing depending on how you use your bike. They are also likely to give your bike a first free service once you have bedded it in.
Can bikes be procured via a mail order specialist?
Cyclescheme’s partner shops are capable of supplying bike packages by mail order but there are distinct advantages when getting a bike from your local bike shop that will be the first port of call for advice, servicing, after sales and warranty. Some mail-order specialists are not part of the Cyclescheme partnership network. Please note that delivery fees for mail order bikes must be paid for outside of the scheme (i.e. they do not qualify for tax relief).
Are electric-assist bikes allowed in the scheme?
Yes, you can select electric-assist bikes in the scheme. You may need to know that, if your employer has a £1000 limit on voucher price, you cannot exceed this figure for a more expensive electric-assist bike.
Will the partner shop be able to order my bike for me?
Bike shops can order bikes and accessories for you but may wish to either take a deposit or have any carriage fees covered to prevent them from being left with a special-order bike or paying extra carriage fees.
Any deposits taken on your credit card will be credited back when you redeem your voucher.
A small £10 carriage admin charge will end up costing you a few pence each day.
Is there a credit check?
There is no credit check.
Is a Consumer Credit Licence required?
The government has issued a blanket consumer credit licence to all participating employers buying bike packages up to £1000 including VAT. When you sign the Hire Agreement, the resulting relationship is defined under the terms and conditions of the Credit Consumer Act.
What happens if an employee leaves the job before they’ve finished paying for the bike?
Under the terms of the Hire Agreement and the Credit Consumer Act, the agreement to pay your hire is non-cancellable. This means that you will need to settle all outstanding monies before you leave. The outstanding balances will be deducted from your final net salary payment as a termination fee. Settlement will be from net pay because once you leave; you also leave the bike scheme, and are no longer eligible for tax deductions.
The hire agreement termination fee will not exceed a value equal to your outstanding monthly salary reductions. This termination fee will be collected by your employer from any remaining net salary payments.
If the hire agreement is terminated early the bicycle remains the property of the University. For early leavers, who wish to keep the bike package, a fair market value payment (to legally transfer the title of goods) equivalent to the fair market value will also be payable.
What happens if an employee leaves the job after they've finished paying for the bike but still have the bike on loan?
As the bike is still the property of the University you may be given the opportunity to transfer ownership of the bike to you or buy the bike for a fair market value. Alternatively you may return the bike to the University.
What happens if someone changes their mind after joining the scheme?
Under the unique terms of the scheme it is not possible for you to cancel your hire. You are therefore committed to Cycle Plus for the duration of the hire period. If your employment is terminated during the hire period you will still be liable to complete payments identified in the agreement. This means that you must be sure you are happy entering the scheme and with the selection you have made.
More frequently asked questions outlining how participating in all parts of Benefits Plus may affect you can be found at Benefits Plus: frequently asked questions.
If you have any further questions about Cycle Plus, please phone 0141 330 3106 or email email@example.com.