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Are you aware that a Government sponsored scheme exists that can save you and your employees nearly half the cost of a brand new bicycle and accessories? Governments across the World are starting to recognise the many economic and health benefits of cycling and are putting in place personal and corporate financial incentives to encourage greater bicycle use.
In the UK we have the Governments Green Transport Plan, with three main objectives:
1. To decrease congestion on the countries roads, towns and cities.
2. To decrease Co2 build up, exhaust fumes and pollution.
3. To encourage the nation to become healthy and fitter.
With this is mind the government launched the Ride to Work scheme to encourage your employees to buy a new bicycle and accessories to ride to work without paying NI contributions, income tax or even VAT on the total amount.
Making a savings to them of up to nearly 50%! |
We at Chain Reaction Cycles are committed to promoting this plan using our Ride to Work scheme, enabling your business and staff to take full advantage of these incentives and allowing us to supply bicycles and accessories to your staff at huge savings, and all at no cost to yourself... in fact you may be able to actually save some money.
When you use Chain Reaction Cycle - the Worlds largest online bicycle store, you can be confident that both you and your staff will be given expert advice and help to ensure they get full advantage of all the scheme and cycling has to offer you. |
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1. The Employer buys the Bicycle from Chain Reaction Cycles.
2. The Employer can claim back the VAT on the purchase.
3. The VAT free price of the Bicycle is divided by 12 and this amount is deducted from the Employees monthly salary via a Salary Sacrifice. Throughout these 12 months the employee is leasing the bicycle from the employer. The Employee is making additional savings as they will not pay any Income Tax or National Insurance on the amount of Salary reduction.
4. At the end of the 12 months hire agreement, the Employer may 'sell' the Bicycle to the Employee for an agreed fee. |
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It is the responsibility of the employer to administer the 'Ride to Work Scheme' so that the tax benefits are passed on to the Employee. Implementing the scheme is fairly straightforward. Here is what you need to do:
1. Complete the forms and purchase the bicycle
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a. Your employee will provide you with a completed order form itemising the bicycle and accessories they wish you to purchase under the scheme. They should also provide you with a pre contract agreement and the hire agreement.
You can download all these forms here.
b. Complete the 'Pre-contract information'. (The pre-contract is required under the Consumer Credit Act 1974)
c. Prepare the 'Hire Agreement', and have the Employee sign, before signing yourself.
d. Order the bicycle from ChainReactionCycles either by sending us the order form along with payment or simply by ordering on-line or over the phone. If you prefer you can also come and see us at our store. We accept payment from all major credit cards, Bank Transfer and Cheque.
The minimum amount that can be spent is £250. There is no maximum amount but you must be aware that your business will need a consumer credit licence if the bike is more than £1000.
On receipt of payment CRC will dispatch the goods to the Employers address, or the Bicycle can be collected from the Chain Reaction Store. (It is also possible to send the goods to the employees address but only if payment is made by Cheque or Bank Transfer) |
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2. Claim the VAT back
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The bike will be supplied with an Invoice. Use this Invoice to claim the VAT back as a business purchase. |
3. Implement the Salary sacrifice scheme
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Take the VAT free price of the bicycle and divide it by the number of months the hire agreement covers (We recommend 12 months but the maximum is 18 Months). This amount will equal the monthly hire of the Bicycle. This monthly salary sacrifice should be deducted from the employees gross monthly salary, before Tax and National Insurance is calculated. |
4. Completion of the hire agreement
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Once the hire agreement has been completed you have one of two options.
You can retain ownership of the bicycle and let the employee continue to use the bicycle without incurring further salary reductions.
You can transfer ownership of the bicycle to the employee by selling it to them for an agreed fee. |
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- The Employer must be VAT registered in order to claim the VAT back on the purchase price of the bicycle
- The Employer will also save, as there is no Employer NIC to pay on the salary sacrifice
- The Employee must mainly use the bike for a journey or part of a journey between the employee's home and work place. Or from one workplace to another
- The Employee is responsible for the maintenance and insurance of the bike
- If the Employee leaves employment before the hire term is completed the employee is required to pay compensation to the employer. This compensation is usually the fair market value of the goods.
- The Employee can lease a complete bicycle and associated safety equipment as part of the scheme. It as also possible to purchase more than one bicycle if for example, if the employee needed a bicycle at either end of a train journey
- The Employee must be on your payrole and pay tax through PAYE
- The Employee must be over 18
- The salary sacrifice must not push the employees salary below the national minimum wage
- The employees contract period must be longer than the lease period
- The Scheme must be made available to all employees
- The Employer owns the Bicycle until ownership is transferred at the end of the lease period
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As an employee you can benefit from the Cycle to Work scheme. The process is very simple. Basically you employer will purchase a bicycle and you will lease the bicycle off your employer over a time period (We recommend 12 months but the maximum is 18 Months). The lease payments will add up to the VAT free price of the bike. This means that you will save both the VAT + the tax and National Insurance that you would have paid on the deductions for the hire. These savings can add up to 50% off the price of the bicycle.
To take part in the scheme follow these simple steps.
- Inform your employer that you would like them to take part in the scheme, providing them with this information pack which you can download in full.
- On agreement with your employer, choose your Bicycle and accessories from www.ChainReactionCycles.com, taking note of the product ID of the items you wish to lease under the scheme.
- Fill in the order form and pass it to your employer ensuring they have all the forms provided in the information pack.
- Your employer will complete the 'Pre-Contract Agreement' and give it to you to sign.
- Your employer will then complete the hire agreement from and this will be signed by both you and your employer.
- Your employer will then order the bicycle and accessories from ChainReactionCycles either by posting a copy of the order form with payment, or by simply ordering online.
- Your Employer will then implement the salary sacrafice were the hire fee will be deducted from your monthly salary for a period of 12 months.
- Once the lease period is over, your employer can continue to let you use the bicycle without incurring a hire fee. Or, your employer can transfer the ownership of the bicycle to you for an agreed fee.
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- The amount saved on the bicycle will depend on the rate of tax and national insurance
- Your Employer must be VAT registered in order to claim the VAT back on the purchase price of the bicycle. If your employer is not vat registered your savings will be limited only to the savings made on Tax and National Insurance.
- You must mainly use the bike for a journey or part of a journey between the employee’s home and work place. Or from one workplace to another.
- You are responsible for the maintenance and insurance of the bike
- Accessories available under the scheme:
Cycle helmets
Bells and bulb horns
Lights, including dynamo packs
Mirrors and mudguards
Cycle clips and dress guards
Panniers, luggage carriers and straps to allow luggage to be safely carried
Locks and chains to ensure bicycle can be safely secured
Reflective clothing along with white front reflectors and spoke reflectors
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If you leave employment before the hire term is completed you are required to pay compensation to your employer. This compensation is usually the fair market value of the goods.
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You can purchase a complete bicycle and associated safety equipment as part of the scheme. It as also possible to purchase more than one bicycle if for example, you needed a bicycle at either end of a train journey.
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You must be on your Employers payroll and pay tax through PAYE
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You must be over 18
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The salary sacrifice must not push your salary below the national minimum wage
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Your contract period must be longer than the lease period
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Your Employer owns the Bicycle until ownership is transferred at the end of the lease period |
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