Cycle to Work Scheme

Eligibility

Any employer can run a Cycle to Work scheme. It can benefit both the employer and the employee.

Salary Sacrifice

It is often set up in conjunction with a Salary Sacrifice scheme. Salary sacrifice is where your employee agrees to give up part of their pre-tax salary in exchange for a benefit from their employer. The salary sacrifice arrangement is typically for at least 12 months.

Tax Benefits

The benefits offered through a cycle to work salary sacrifice arrangement are exempt from tax for the employee.

The employer also does not have to pay employer NICs on the salary foregone.

Hire Agreement

A separate hire agreement (which may or may not be regulated by the FCA) will be required. This will typically be between the employee and the employer, who has either purchased the equipment or leased it from a third party. The employee will pay for the hire via the salary sacrifice arrangement with the employer.

In many cases, the hire agreement may be between the employee and a third party, such as a scheme provider(see below), who hires the goods to the employee and is remunerated by the employer from the salary sacrifice proceeds.

Conditions

• The employee must not, at any point during the hire period, own the cycle.
• At least 50% of the cycle’s use must be for ‘qualifying journeys’ i.e. commuting to work.
• The offer of the use of hired cycles must be made available across the whole workforce.