Cycle to work scheme (sorry if this has been asked before)

Can someone please explain how this works (for both employee and employer) or point me to somewhere that I can read about it.

I am the employee and I am looking to buy a new bike before Christmas and my initial discussion with work are that they are happy to happy to support me. In fact the financial director says he might like to buy one as well.

Is there a maximum price?

How does the employer register?

Are all bike shops (independents as well) registered?

Thanks

No

Speaks to whichever scheme they want to join

No, but most take at least a couple of the different schemes.

I think your employer can just self administer if there are only 2 of you.

You would order the bike, let’s say it costs £600, from the shop. (All numbers below made up but they illustrate the point).

Your employer pays the bill so you now owe your employer £600.

They get that £600 back as a £50/month pre tax salary sacrifice deduction from your payslip each month over a year.

Your pre tax salary is £50 lower. But you would have paid £10 tax and £5 National Insurance on that £50 and so only received £35 of it. So you’re only missing out on £35*12=£420 over the year.

Your employer also avoids paying National Insurance (and pension contributions?) on the £50 each month so they also make a payroll saving.

Edit: but at the end of the year you don’t actually own the bike. You can normally pay a nominal amount to extend the ‘lease’ for another few years. Or pay more to purchase it outright, HMRC have a table setting out the % of original price to be used to value the bike.

Edit: what Bails said. I would add that I think the employer can recover VAT on the bike purchase, and would have to administer the final purchase of the bike by you (until that point the company owns the bike AFAIK).

Most scheme operators (Cyclescheme, Cycle Solutions etc) have a lot of info on how these schemes work on their websites as part of their “pitch” to employers.

My employer had an arrangement with Evans, which kinda limited options. Paul @ Cotic pointed me towards the Green Cycling Initiative and our HR/finance people found them really quick & easy to process everything. And I got a lovely Cascade 🙂

Rob

My employer a few years ago was not in a good place (Travel Co in Covid) so when I put in my request, and they had no limit specified.  I offered to pay up everything on their books in advance.  So no money sat on their books.  Worked a treat for me.