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FAQS for Employers

Cycle to Work Save up to 42% on a new bike and kit

FAQs for Employers

There is no cost to the employer for setting up the Cycle to Work scheme. The employer is buying the equipment (a bike and / or cycling safety accessories), then hiring it to the employee over the term of a hire agreement.

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  • How do I speak to someone about the scheme?
  • If you require further assistance you can email ridetowork@chainreactioncycles.com

  • How do I join the scheme?
  • You can contact us on ridetowork@chainreactioncycles.com.
  • Who does the equipment belong to?
  • The equipment belongs to the employer and it is hired to the employee for the period of the Agreement.
  • What happens at the end of the salary sacrifice period?
  • At the end of the salary sacrifice period ownership does not automatically transfer to you. HMRC states that if you wish to take ownership immediately there is a fair valuation fee (Fair Market Value) that needs to be paid as listed below.

    HMRC has published the following 'Valuation Table' to be used to calculate the market value of bicycles and safety equipment at the end of the hire period:

    Age of cycle Acceptable disposal value percentage
    Original price less than £500 Original price £500+
    12 months 18% 25%
    18 months 16% 21 %
    2 years 13% 17%
    3 years 8% 12%
    4 years 3% 7%

    Most employers prefer to maximise the benefit by offering two options instead of the above.

    1. A free extended hire term until the valuation fee is zero (year 5). There are no hire costs during the extended term and you continue using the bike free of charge.
    2. To report the valuation fee as a benefit in kind (P11d) meaning that you only pay tax on the valuation fee, rather than the valuation fee itself.

    For example:

    • A £450 bike transferred at 12 months would result in a tax adjustment the following year of £16.20 for a basic rate tax payer and £32.40 for a higher rate tax payer.
    • A £800 bike transferred at 12 months would result in a tax adjustment the following year of £40.00 for a basic rate tax payer and £80.00 for a higher rate tax payer.

    Check with your employer which end of scheme option applies or speak to the Ride-to-Work helpdesk for further advice.

  • How much will this cost the employer?
  • Nothing.

    There is no cost to the employer for setting up the Cycle to Work scheme. The employer is buying the equipment (a bike and / or cycling safety accessories), then hiring it to the employee over the term of a hire agreement.

    Hire payments are made via salary sacrifice, usually over 12 months, up to a maximum of 18 months, until the full amount is recovered.

    You will make a corresponding saving in employers National Insurance Contributions based on the amount of salary sacrifice made by employees participating in the scheme.

  • Does the employer need to apply for dispensation from HMRC to provide Ride-to-Work?
  • No. We provide all the necessary forms and agreements.
  • Does my organisation need to apply for a credit licence?
  • No. The Financial Conduct Authority states that a cycle to work scheme does not require a Consumer Credit Licence where the total amount of an employee’s salary sacrifice does not exceed £1,000.

    If you would like to allow your employees to salary sacrifice over £1,000 you will need to apply for your own Consumer Credit Licence.

  • What are the rules regarding maternity leave?
  • If an employee goes on maternity leave during the salary sacrifice period and their salary falls below NMW the employer has the option to initiate a repayment holiday or to continue with payments. Employers would need to supply the employee with an amendment to the hire agreement for signature.

    The Office of Fair Trading rules state that if the hire agreement term runs over 18 months the employee has a right to cancel the contract and therefore employers need to keep this in mind when extending the term of the salary sacrifice.

    Employers are not liable to make the payments while the employee is on maternity leave.

  • I am self-employed - can I join the Ride-to-Work scheme?
  • You must be paid via PAYE to make the salary sacrifice.
  • Is the employer liable?
  • This is highly unlikely.
  • What happens about stolen bikes and insurance?
  • Insurance of the bike and equipment is the employees' responsibility.

    If a bike being hired through the scheme is stolen we generally recommend that it can be replaced via insurance for the same or similar product where the employer is happy to accept this. Replacement bikes should continue to be used for the purpose of cycling to work for the remaining duration of the hire agreement.

    In cases where the equipment is not insured the employer generally requires the balance of outstanding payments to be made. No Fair Market Value fee is required on stolen cycles.

  • Who is responsible for maintaining the bike?
  • It is the employee’s responsibility to maintain the bike.

More information

Cycle to work scheme implementation guidance.

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