The benefits of cycling include a positive effect on your mental and physical health in addition to reducing one’s carbon footprint considerably. Many businesses and organisations greatly advocate for their employees to take up cycling over driving into the office, providing a cheaper and better travel option which improves air quality and an overall standard of living.

Below we break down exactly what the Cycle To Work Scheme is, the impact it can have on the workforce and how employers and employees can sign up.

The Cycle to Work Scheme and How it Works

The Cycle to Work Scheme is a salary sacrifice scheme, which basically means an employee agrees to exchange part of their salary for a non-cash benefit, which in this circumstance is a bike or cycling equipment. A Cycle to Work Scheme can benefit both the employer and the employee through both financial and health means.  Depending on how much tax an employee pay and which scheme an employer offers, the typical savings equate to 32%-42% on a bike and/or safety accessories. For example if an employee chooses to salary sacrifice £700 for a new bike and cycling kit, the monthly deductions from their gross pay would equate to £58.33 (£700 divided by 12 months). As the gross pay has reduced by £700 they won’t be entitled to pay tax or national insurance on that amount, meaning if they are a basic rate tax payer the total cost would be £476, which is a 32% saving of £224. For those who are on the higher rate of income tax, the savings will be even higher.

How do I Register for the Scheme as an Employer?

If an employer chooses to take up the Cycle To Work Scheme, they will need to complete a short registration with a dedicated provider which will then give access to a range of free promotional materials outlining the benefits of the scheme to pass onto employees. They then instruct their employees to have a look at the type of bike and equipment they want, which is then appropriately reviewed and signed off by a HR or company representative. The bike and accessories are then ordered, with salary repayments starting over a 12 month period. After this period the employer will have recovered their costs and generated up to 13.8% in savings. The employee will be then given a range of ownership options on whether they want to own the bike outright, or even upgrade to a different bike on the same scheme.

How do I Register for the Scheme as an Employee? 

You will need to speak to management or a HR representative at your business or organisation if you’d like to enrol in the Cycle To Work scheme or to see if the Cycle To Work scheme is already in place. Once your employer is signed up, they will receive an employer code which can be used in all Cycle To Work schemes by providers. Employees can then log on to the relevant provider’s Cycle To Work scheme portal and choose the specific bike and equipment they want. Once arrived, it will trigger the 12-month salary repayment period, with the relevant amount being deducted from payslips.

We hope this has outlined to you exactly what the Cycle To Work Scheme is, and its overwhelming benefits for both employers and employees. If you require any further information on any government work schemes, or anything accounting related for that matter, please don’t hesitate to get in contact with us.