With the Government’s new Cycle To Work initiative, you can buy a bike tax-free and save money by cycling to work.
If you have been considering riding your bike to work instead of driving a car or riding the bus, you could save money by getting a new bike through CycleScheme.
The government’s Green Transport initiative aims to cut down on carbon emissions by having fewer vehicles on the road. Therefore they are encouraging people to ride bikes to work instead of getting in the car for what is often a short journey.
With this in mind CycleScheme has been set up, an independent organisation which connects working people and their employers with over 1,200 independent bike shops. Through their programme you can buy a bike of your choice tax-free up to the value of £1,000.
The scheme is open to all UK taxpayers who pay PAYE.
How does it work?
First you’ll need to inform your employer of CycleScheme, as they will have to agree to the scheme before you can get your bike. Your employer can download a brochure giving all the necessary details here. You can then visit a participating bike shop (find your nearest one here) and select a bike plus equipment of your choice.
When you have chosen your bike, enter the details on CycleScheme’s online tool and request a voucher, which your employer will approve. Your employer pays for the cost of the bike (tax-free) and you buy the bike back from them little by little with a temporary reduction to your wages.
How much will I save?
The scheme works via a ‘salary sacrifice’ system, whereby your wages are slightly reduced over what is usually a 12-month period in order to pay for the bike. But, as you will be paying back your employer for the bike from gross pay rather than net, you will benefit from tax and NI relief.
With the reduction in tax, it’s possible to save between 30% and 50% by buying a bike through the scheme – but this all depends on your personal tax band and the way your employer runs the scheme. You will have to pay a Fair Market value for the bike once you have finished making the payments from your salary, but this will be much better value for money than if you had just bought the bike outright.
The result of you and your employer joining the scheme is that you will be able to get a brand new bike at a reduced price, reduce your carbon footprint and the cost of getting to work – and get fitter at the same time.
Check out the CycleScheme website for all the details you’ll need to get started.
