Frequently Asked Questions
- Can I use the scheme to get a bicycle for a family member, partner or friend?
- Can I apply for more than one bicycle?
- When can I collect my bike?
- What if I can't get to the shop, will I miss out?
- What happens if I decide I no longer wish to use the bike for commuting after I have joined the scheme?
- Will a salary sacrifice affect my entitlement to benefits?
- Will my salary automatically rise at the end of the hire period?
- Why would my employer want to run a scheme?
- I've only been with my employer for a short time. Am I eligible?
- I'm paid the minimum wage. Am I eligible?
- I'm freelance, self-employed or on a short-term
contract. Am I eligible?
- What if my bike is faulty?
- What if my bike gets stolen or is accidentally damaged?
- Isn't Cycle2Work too good to be true?
- Is there a maximum value to the amount of equipment I can obtain through Cycle2Work?
- What equipment is available?
- Who owns the bicycle and cycling safety equipment?
- What if I leave my job before the end of the loan period or am made redundant?
- What if I already own a bike - why would I want a new one?
- What happens to the bike at the end of the loan period?
Can I use the scheme to
get a bicycle for a family member, partner or friend?
No. The bicycle must be used by you, mainly for commuting to work,
i.e. for journeys made between the home and workplace, or part journeys
(for example, to the station), or for journeys between one workplace and
another.
Can I apply for more than one
bicycle?
Yes, providing that you use both for commuting to work. For example,
you may have a summer route and a winter route to work, both requiring
different things from a bike.
When can I collect my bike?
If the bike you want is in stock then you can collect the bike as soon as we have received payment
(either on-line or through a company cheque). All you need to do is present a form of
ID and you can take the bicycle home with you.
Otherwise we will order your bike for you, build it and check it so that it is ready to ride away.
What if I can't get to the shop, will
I miss out?
No, you can still participate. You can order over the phone or via our online shop and we
will deliver it to you.
What happens if I decide I no longer
wish to use the bike for commuting after I have joined the scheme?
You will no longer qualify for the tax relief afforded to this
benefit. In such circumstances you will need to advise payroll, who will
arrange for the remaining salary reductions to be taken from your pay
after tax and National Insurance have been deducted. You cannot return
the cycle and have your salary re-adjusted.
Will a salary sacrifice affect my
entitlement to benefits?
Possibly, although in most cases the effect is likely to be small.
However, you need to be aware of the implications of paying less tax and
NI contributions and accepting a reduced salary. For a small number of
employees, particularly those on low-incomes, Cycle2Work schemes might
not be appropriate. There may be an impact on:
- Pension schemes being contributed to (especially if you are nearing retirement and contribute to a final salary pension scheme).
- Entitlement to contribution-based benefits like the State Pension, Jobseeker's Allowance and Incapacity Benefit. This is particularly likely if your salary after taking a salary sacrifice falls below the Lower Earnings Threshold.
- Entitlement to earnings-related benefits like Maternity Allowance and the State Second Pension.
- Entitlement to work-related benefits like Statutory Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay.
If you would like a fuller explanation of the effects of salary sacrifice on benefit entitlement, please contact Her Majesty's Revenue and Customs.
Will my salary automatically rise at the end of the hire period?
This is between you and your employer, as by opting for a salary sacrifice you are giving up your contractual right to future cash remuneration. In order to qualify for the tax-benefits of Cycle2Work, you're technically agreeing to a salary reduction rather than a deduction, although in practice this distinction is not normally worth worrying about.
Why would my employer want to run a
scheme?
Cycle2Work is good news for employers as well as employees, which is
why it's worth them running a scheme. For example, it's an easy way of
improving morale, it contributes towards a green transport plan, and
shows they are environmentally conscious - which these days is often a
core business objective.
There is also research to suggest that the fitter you are, the less likely you are
to take days off sick, which is also a benefit to employers
I've only been with my employer for a
short time. Am I eligible?
That depends on your employer - some may restrict eligibility based
on length of service, others may want to open out the scheme for all.
I'm paid the minimum wage. Am I
eligible?
Unfortunately not. Cycle2Work is funded by salary sacrifice, and it
would be illegal for your employer to pay you less per hour than they
already do.
I'm freelance, self-employed or on a
short-term contract. Am I eligible?
Sadly not.
What if my bike is faulty?
All bikes come with a 12 month warranty, which means that all issues that fall within this warranty will be either repaired or replaced, whichever is more appropriate. You are deemed to be leasing the bike from your employer, therefore the contract for the purchase of the bike is between Richardson's Cycles and your employer. This means that we provide the warranty for your employer, which you are able to take advantage of. You should therefore return your bike to to the shop to be inspected in the event of a warranty issue.
What if my bike gets
stolen/accidentally damaged?
Should any bicycle or piece of bicycle safety equipment be lost,
suffer accidental damage or become inoperable you will be required to
continue to meet your financial responsibilities for the remainder of
the hire period. Any replacement bicycles or bicycle safety equipment
fall outside the terms of this Hire Agreement. You solely bear the
entire risk of loss, theft, damage to, or any loss or destruction of the
bike. Any loss will not affect the continuation in force of the Hire
Agreement. It is therefore recommended you obtain separate insurance, or
ensure your bike is covered by your home contents insurance policy. If
your home contents insurer covers the bike, you must inform them that
your employer (or their nominal agents) has an interest in the bike.
Isn't Cycle2Work too good to be true?
Don't be put off from signing up to your employer's Cycle2Work
scheme because up to 50% off a bicycle and cycling safety equipment
sounds too good to be true. Cycle2Work really is as positive as it
sounds. To appreciate this, it helps to understand the government's
motives for offering such a generous tax break. Offering great savings
off bicycles and cycling safety equipment isn't an act of generosity or
a tax loophole, it makes sound environmental sense. The more people use
alternative, more environmentally friendly modes of transport, the less
car usage there will be - which would lead to a reduction in carbon
emissions, which is a high priority for the government.
Is there a maximum value to the
amount of equipment I can obtain through Cycle2Work?
There is no maximum value of equipment available through Cycle2Work.
The Government provides a Consumer Credit License to employers specifically for the Cycle2Work
scheme which allows a maximum of £1000 (inc VAT) per person.
However, your employer may choose to apply for a License
that permits them to offer you in excess of this amount, or may already have such a licence
due to the nature of their business.
What equipment is available?
Cycles and cyclists' safety equipment are included. The tax
exemption defines a "cycle" as "a bicycle, a tricycle or a cycle having
four or more wheels, not being in any case a motor vehicle" (192(1) of
the Road Traffic Act 1988 (c52.)). An electrically assisted pedal cycle
can be included under the scheme.
Cyclists' safety equipment is not defined in the legislation and a common sense approach should be taken when selecting it. This could include:
- cycle helmets which conform to European standard EN 1078,
- bells,
- bulb horns,
- lights including dynamo packs,
- mirrors and mudguards to ensure the riders visibility is not impaired,
- cycle clips,
- dress guards,
- panniers,
- luggage carriers and straps to ensure luggage is carried safely,
- locks and chains to ensure cycle can be safely secured,
- pumps,
- puncture repair kits, tool kits and tyre sealant to allow for minor repairs,
- reflective clothing,
- white front reflectors,
- and spoke reflectors.
Who owns the bicycle and cycling
safety equipment?
Cycle2Work schemes operate as a lease: your employer is technically
loaning the equipment to you for a fixed-period. After the agreement
period is over, your employer may offer to sell the equipment to you for
its fair market value at that time.
What if I leave my job before the end of the
loan period or am made redundant?
If you leave before the end of the hire period, you must pay your
employer the balance of the amount still to pay and this will deducted
from your final net pay. However if your final salary is not sufficient
to cover this amount, you will be required to pay your employer this
outstanding money by cheque/cash within 14 working days of leaving the
company. You may then have continued use of the equipment without
further payment until the hire period expires, when you may be offered
the opportunity to purchase the equipment for its then fair market
value. However this transfer of ownership is the subject of a separate
agreement and is not governed or influenced by the Hire Agreement you
sign for this scheme.
What if I already own a bike - why
would I want a new one?
Your old bike needn't be redundant. You may find that as you start
to cycle more and more that you need a bike with higher quality
componentry, which will allow you to ride more efficiently. You may also
sometimes take different routes when travelling to work, i.e. a summer
route and a winter route, which might benefit from a different type of
bike for each journey.
What happens to the bike at the end of the loan period?
Under a salary sacrifice scheme your employer may choose to sell the bike and safety equipment at the end of the loan period.
However, in order to obtain the benefit of the tax exemption the employers must not suggest that either the employee or any other person will later have the option to buy the equipment they have hired. Moreover, if the employer states that the employee will or may have this option, then the agreement will fall within the definition of hire purchase in section 189 of the CCA and may not attract the tax benefit. In addition, these agreements will fall outside the scope of the group licence and without the cover of a credit licence the employer may commit a criminal offence. The employer may at a later date exercise a discretion to sell to the employee.
We therefore advise employers that they can indicate in promotional literature that ex-rental equipment may be sold for a fair market price, but they should make it clear that they cannot commit themselves to doing so, either to the hirer or to his nominee. Any subsequent sale must be pursuant to a separate agreement, entered into after the conclusion of the hire.
Ultimately only a court can decide whether the agreement is hire or hire purchase.