An Antidote contributor saw a notice in Scott’s Cycle Shop last week, about the Cycle to Work scheme, building on a government tax break. A young man was happily taking possession of a superb new cycle under the scheme, which Birmingham University – his employer – has joined.
The scheme is available to UK taxpayers who pay PAYE; the self-employed cannot take part in the scheme.
This is the way it works, according to the official Department for Transport info
- Your employer signs up for the scheme
- You then choose a bike from an approved supplier
- The bike is then bought by your employer who reclaims the VAT
- You then take delivery of the bike for your exclusive use – provided you use it for qualifying journeys, i.e. commuting to work
- The VAT free price is then deducted from your salary by equal instalments over a period of time (typically 18 months), but as you don’t pay tax or NI on the income you forego, this will give you further savings.
- After the period of salary sacrifice, the employer may give you the option to purchase the bike at a ‘fair market price’, though depends on the period you have had the cycle loaned to you.
This ‘fair market price’ is usually 5% of the original package price. So, after a 12 or 18 month ‘loan’ for a bike package costing £1000, that would mean that the employee takes full ownership for just £50.
Click here to see a short video about Cyclescheme
More information in http://www.bikeforall.net/content/cycle_to_work_scheme.php
Its slogan: Get a bike, protect your savings and get fit.