Are you aware that a government sponsored Benefit scheme exists in Northern Ireland and mainland Britain that can save you and your employees up to 47%* off 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 Government's Green Transport Plan, with three main objectives:
- To decrease congestion on the country's roads, towns and cities
- To decrease CO2 build up, exhaust fumes and pollution
- To encourage the nation to become healthier and fitter
With this in mind the government launched the Cycle to Work Scheme, http://assets.dft.gov.uk/publications/cycle-to-work-guidance/cycle-to-work-guidance.pdf, to encourage employers to buy a new bicycle and safety equipment and loan it to their employees under a Salary Sacrifice arrangement. The employee benefits from not paying Income Tax and National Insurance Contributions on the hire amount agreement - making savings of up to 47%*!
We are committed to promoting this plan using our 'Ride to Work Scheme', enabling business's to do something positive for their staff by promoting a healthy life style, and contributing to overall local and world health. Employers may take full advantage of these incentives by allowing us at Chain Reaction Cycles Ltd to supply bicycles and accessories to your staff at huge savings, along with a step by step guide on how to run this simple scheme, providing posters on promoting it to your staff, and best of all with no cost to set up...in fact you will be able to actually save some money.
When you use Chain Reaction Cycles Ltd, the world's largest online bicycle store, with Retail outlets, offering the world’s greatest range of both bicycles and accessories you can be confident that you'll be given expert advice and help to ensure you can take full advantage of everything the scheme and cycling has to offer.
Although Chain Reaction Cycles Ltd. has its own Ride to work scheme we also accept vouchers from other Ride to Work schemes. Please contact us to discover what schemes are available. Please note that a 10% administration charge will apply on all non Chain Reaction schemes.
- The employer buys the bicycle and the accessories of their choice, or lets the employee choose their own from Chain Reaction Cycles Ltd.
- The employer can claim back the VAT on the full business purchase, if the business is vat registered, plus claims a 13.8% reduction in their employer’s National Insurance Contribution. The employer must account for VAT on the salary sacrifice payments in the normal way through their VAT return.
- The price of the bicycle and accessories is divided over a period of months, with Income Tax and National Insurance Contribution saving benefits to the employee (can be up to 52%* of the purchase cost). Throughout this period the employee leases the bike from the employer.
- At the end of the lease agreement period the employer has four options - these are:
- The employee completes extended use agreement with their employer for a further 48 or 60 months. The employee continues to use the bike free of charge for commuting and leisure. The employer still owns the bike. The employee may be given the option to own or return the bike after this period at no extra cost.
- The employee pays either 18% or 25% of the certificate value to take ownership of the bike now, http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm.
- The employer can transfer the ownership of the bike for a nominal fee and declare the Full Market valuation amount as a taxable benefit by using a P11D form.
- Return the bike to the employer.
|18 Month Salary Sacrifice Example|| || || |
|Rate of Tax ||Basic Rate ||High Rate ||Additional High Rate|
|Purchase value of bike and accessories inc vat||500||500||500|
|Monthly Salary Sacrifice||27.78||27.78||27.78|
|Monthly Income Tax and NIC savings||8.88||11.66||13.06|
|Net Monthly Payment Salary Sacrifice||18.9||16.12||14.72|
| || || || |
| || || || |
|Overall Saving on purchase Price||159.84||209.88||235.08|
It's 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 and safety equipment
- You choose the bike/bikes and accessories you wish to purchase under the scheme, or your employee can choose the products and provide you with a completed order form. You provide the employee with a pre contract agreement and a hire agreement.
- Complete the 'Pre-contract information'. (The pre-contract is required under the Consumer Credit Act 1974).
- Prepare the 'Hire Agreement', and have the employee sign, before signing yourself.
- Order the bicycle/accessories from Chain Reaction Cycles Ltd either by sending us the order form along with payment or simply by ordering online or over the phone. We accept payment from all major credit cards, PayPal or bank transfer. If you prefer you can also come and see us at our stores, where one of the team can walk you through the process and assist you in your choice of product.
If an employer wishes to offer bicycles and equipment to the value of more than £1,000, the employer must have a Consumer Credit Licence Category B. Special circumstances can occur when a bike can be purchased for more than £1,000 without a Category B Licence. Please contact Chain Reaction Cycles on firstname.lastname@example.org for information on this.
For more information about how to apply for a Consumer Credit Licence please go to: https://www2.crw.gov.uk/LIVE/CCL/OnlineForm.aspx
Alternatively, if employers are happy to offer employees bicycles and equipment to a maximum value of £1,000, employers are covered by a Ride to Work scheme specific Group Consumer Credit Licence. This Licence is free and instantly downloadable from the Office of Fair Trading website: http://www.oft.gov.uk/shared_oft/business_leaflets/credit_licences/c2w-licence.pdf
For more information about the Group Consumer Credit Licence, visit: http://oft.gov.uk/OFTwork/credit-licensing/cycle.
Employers are also able to set a limit per employee within the £1,000 mark if required.
On receipt of payment Chain Reaction Cycles Ltd will issue a Letter of Collection to the employee or dispatch the goods to the employers' address or to the employees address if authorized to do so by the employer.
2. Claim the VAT back
As this is considered a standard business purchase you may claim the VAT back in the normal way via your VAT return. You must account for VAT on the monthly salary sacrifice amount in the normal way via your VAT return.
3. Implement the salary sacrifice scheme
You take the price of the bicycle and equipment and divide it by the number of months the hire agreement covers. This amount will equal the monthly hire of the bicycle and should be deducted from the employee's gross monthly salary, before tax and National Insurance is calculated. This will result in an Income Tax and National Insurance saving for your employee, up to 47%*, together with a National Insurance saving for yourself.
4. Completion of the hire agreement
Once the hire agreement has been completed you have one of four options:
- The employee completes the extended use agreement with their employer up to a maximum of – 48 or 60 months. 48 months if the bike cost less than £500, 60 months if the bike cost more than £500. The Employee continues to use the bike free of charge for commuting and leisure. The employer still owns the bike Employee may be given the option to own – or return the bike after this period at no extra cost.
- The Employee pays either 18% or 25% of the certificate value to take ownership of the bike now. 18% if the bike cost less than £500 and 25% if the bike cost more than £500. See http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm.
- The Employer can transfer the ownership of the bike for a nominal fee and declare the full market value amount as a taxable benefit by using a P11D form.
- The employee can return the bike to the employer.
We would advise all employers to seek advice from their accountant or tax advisors before making any decisions on these options. Further information is also available from www.hmrc.gov.uk
- The employer must be VAT registered in order to claim the VAT back on the purchase price of the bike; however VAT is accountable on the salary sacrifice payment.
- The employer will also save, as there is no Employers National Insurance Contributions to pay on the salary sacrifice amount.
- The employee must use the bike and equipment for at least 50% of the time for a journey or part of a journey between the employee’s home and place of work or from one workplace to another. There is responsibility on the employer to monitor the usage of the bike.
- The employee is responsible for the maintenance and insurance of the bike.
- If the employee leaves the employment before the hire term is complete, the employee is required to pay the full outstanding amount to the employer. This does not attract the free of Income Tax and National Insurance status.
- The employee can lease a complete bike and associated equipment as part of the scheme. It is also possible to lease more than one bike if for example; the employee needs a bike at either end of a train journey.
- The employee must be on the payroll and pay Income Tax through PAYE.
- The employee must be over 18 years of age.
- The salary sacrifice must not push the employee’s salary below the National Minimum Wage.
- The employee’s contract period must be longer than the lease period.
- The scheme must be made available to all employees.
- The employer owns the bike and MAY transfer ownership at the end of the lease period. Please note that the sale of the bike to the employee cannot be guaranteed until the end of the hire period.
- The employer treats the bike and equipment as a capital asset, upon the onset of the hire agreement and disposal of the asset, if the employee chooses to purchase the bike at the market value once the hire agreement is completed.
- The employer treats the value of the salary sacrifice taken from the employee’s wage as income.
- Capital Allowances can be claimed by the employer for as long as the bike is considered a business asset, e.g.
- Cost of bike in year 1 £500
- Amount on which Capital Allowances are due in year 1 is £500 x 15% =£90
- Amount on which Capital Allowances are due in year 2 is £410 x 18% =£74 and so on.
As an employee you can benefit from the Cycle to Work scheme. The process is very simple. Basically your employer will purchase a bicycle and safety equipment which you will lease off your employer over an agreed period of time. The lease payments will add up to the price of the bike and accessories. This means that you will save both the Income Tax and National Insurance Contributions that you would have paid on the deductions for the hire. These savings can add up to 52% off the price of the bicycle.
To take part in the scheme follow these simple steps:
- Inform your employer that you'd like them to take part in the scheme.
- On agreement with your employer, choose your bike and accessories from our website or showrooms, taking note of the product ID of the items you wish to lease under the scheme.
- Fill in the order form and pass this to your employer ensuring that 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 form and this will be signed by both you and your employer.
- Your employer will then order the bike and accessories from Chain Reaction Cycles Ltd., either by posting a copy of the order form with payment, ordering online or presenting the details to a member of the Chain Reaction Cycles team at one of our showrooms.
- Once payment has been received Chain Reaction Cycles will prepare the bike for dispatch. Once the bike is ready for dispatch a Letter of Collection will be issued to the employee to enable the bike to be collected or the bike will be shipped directly to the employers address or directly to the employees address if authority has been given by the employer to do so.
- Upon receipt of the bike and equipment, your employer will then implement the salary sacrifice where the hire fee will be deducted from your monthly salary for the chosen period of 12 or 18 months.
- Once the lease period is over, your employer can continue to let you use the bike without incurring a hire fee. Or, your employer may transfer the ownership of the bike to you at a fair market value. Please note that the sale of the bike to the employee cannot be guaranteed until the end of the hire period.
- The amount saved on the bicycle will depend on the rate of Income Tax and National Insurance Contributions you pay.
- You can purchase a complete bike and associated safety equipment as part of the Ride to Work scheme. It is also possible to purchase more than one bike if for example; you need a bike at either end of a train journey.
- You must be on your employer’s payroll and pay Income Tax through PAYE.
- You must be over 18 years of age.
- The salary sacrifice must not push you below the National Minimum Wage.
- Your contract period must be longer than the lease period.
- The total order value for your bike and accessories should not exceed £1,000, unless your employer holds a consumer credit license.
- Your employer owns the bike until ownership is transferred. Please note that your employer cannot guarantee that the ownership of the bike will be transferred at the end of the hire period.
- You must use the bike for a minimum of 50% of the time for qualifying work related travelling to and from work or between work sites. The bike can be used for recreational purposes the rest of the time. Your employer does not need to monitor the usage of the bike and you do not need to keep any mileage log of the usage.
- It is your responsibility to insure the bike against damage and theft. If the bike is damaged or stolen the hire agreement is not cancelled and you will still be required to pay for the bike and accessories hired. If damaged, you will be required to pay for the repairs. Bikes can be covered by your household contents insurance and treated like any other possession. Check with your insurance company for details.
- If you leave your employment before the hire term is completed you are required to pay the outstanding amount that is left. However, this amount will not be tax free as it will be taken from your net salary.
The following accessories available under the scheme:
- Cycle helmets (showing a EN1078 rating)
- Bells and horns
- Mirrors and mudguards
- Panniers, luggage carriers and straps to allow luggage to be safely carried
- Locks and chains to ensure the bike can be safely secured
- Reflective clothing along with white front reflectors and spoke reflectors
Please note that this is not a comprehensive list of the safety equipment you can choose. If you have any queries regarding what equipment can be included please contact your local HMRC office. In the case where a bike does not come from the supplier with pedals, these can be added as a separate item on the Ride to Work invoice.
You cannot purchase non-essential items such as:
- Cycle computers
- Downhill or snowboarding helmets
- Energy food
- Car racks
Although Chain Reaction Cycles Ltd runs it own Ride to Work Scheme we also accept vouchers from numerous other Ride to Work schemes. Please contact us to discover what other schemes are available. Please note that a 10% administration charge will apply to all non Chain Reaction Cycles schemes.
CRC was established in 1985 and has grown from a small family owned bike shop into the world's largest online store. We love “all things bikes” and we are dedicated to keeping the following 5 core values:
- To sell at the best possible price
- To only sell quality products
- To be honest about when we have products and when we don’t
- To always be there when you need us
- To endeavour to always dispatch goods the same day as you order them
We have the largest stock of specialist cycle components all under one roof!
We have a great team of buyers constantly sourcing the very latest kit and the best deals and we are constantly adding new brands and products. All our products come with full warranty back-up so you can shop with confidence.
We buy big. We buy as much stock as we can get our hands on to achieve the best possible prices and we always pass these savings onto you. We offer savings on even the most up-to-date products but we also specialise in clearance goods from previous seasons, so if you don't mind last year's colour or logo you can save even more.v
Every order is a priority! Our whole operation is designed to get your order out the door and on its way to you in the shortest possible time frame so you aren't left waiting. We aim to dispatch every Ride to work order within 24 hours of payment being received. Delivery is FREE in the UK (minimum orders may apply).
You can visit us in-store at our showroom in Doagh or flagship retail store at Balmoral Plaza, Boucher Road, Belfast or browse this site.
If you need some help with anything to do with cycling you can rely on our large team of bike experts to point you in the right direction.
Our team is highly experienced with in-house experts in all cycling disciplines and are available to contact via email at email@example.com or by calling 028 9335 2976.
A similar scheme operates in the Republic of Ireland, please contact us at email: firstname.lastname@example.org to find out more details regarding this scheme.
*These figures are based on an additional high rate taxpayer
All Income Tax and National Insurance rates are correct at the time of publishing. These are liable to change, please check with HMRC for rate changes.