Organisation name:
Policy Title: CYCLE TO WORK
1.0(Name of organisation) encourages employees to cycle to work as this is known to reduce air pollution and to improve health.
2.0(Name of organisation) helps employees who would like to cycle to work to benefit from a tax incentive by having a cycle to work scheme.
3.0The scheme allows employees of (name of organisation) to benefit from a long term loan of bicycles and commuting equipment such as lights, locks and panniers completely tax free.
4.0Employees wishing to participate in the scheme must agree to forego an amount of salary each month in order to take advantage of income tax and national insurance savings. This is known as “salary sacrifice”.
5.0The bicycle and equipment provider selected by (name of organisation) is Cyclescheme Ltd.(or other)
6.0Eligible employees must:
6.1be paying PAYE
6.2earn more than the National Minimum Wage after salary sacrifice
6.3have a contract that does not end during the hire period.
6.4have successfully passed their probation period.
PROCEDURE
1.0(Name of organisation) will enter into a contract with Cyclescheme. (or other)
2.0Any employees wishing to participate need to visit a Cyclescheme Partner Shop to choose the bicycle and, if required, safety equipment. Find participating bicycle shops using the search on
3.0Employees then apply for a Cyclescheme Voucher by finding out their Cyclescheme Employer Code and entering the information provided by the bicycle shop online. The employee will usually sign an online Hire Agreement at this time.
4.0If (name of organisation) approves the application they will countersign the Hire Agreement and pay Cyclescheme for the full retail price of the bicycle and equipment.
5.0Cyclescheme will then issue a Voucher to either the employee or the employer, whichever is requested.
6.0The Voucher is then redeemed in the bicycle shop and exchanged for the bicycle package. Salary sacrifice then commences over the hire period (usually 12 months).
7.0At the end of the hire period (name of organisation) may choose to offer the employee ownership of the bicycle for a full market value as defined by HMRC.
8.0The bicycle and goods remain the property of (name of organisation) throughout the hire period, unless (name of organisation) chooses to use a finance company to fund the bicycles; in this case the finance company or funding bank will own the bicycles.
9.0It is the employee’s responsibility to maintain the bicycle.
10.0If the bicycle is stolen the employee will be liable for any outstanding monies without any tax exemptions, so it's very important that employees insure their bicycles.
11.0Safety equipment including Home Office-approved 'Sold Secure' D-locks and cable locks can be obtained as part of the scheme.
Date this policy came into effect / Date approved by Governing BodyNext Review Date / As agreed by Governing Body
Name or position of person responsible for this policy
Other related policies / Health & Safety
Relevant legislation / Finance Act 1999
Useful information /
PRACTICE NOTE
Issued to:All Staff / SUBJECT:
CYCLE TO WORK / No:
Issued by: / Date issued: / Date amended: / For Information to:
● Salary sacrifice occurs when an employee agrees to give up part of their salary for an agreed period (in the case of the Cycle to Work scheme this is usually 12 months) in exchange for some kind of non-cash benefit, such as the loan of a bicycle and safety equipment. As salary sacrifice is taken from the gross salary (before tax) rather than net pay it means the employee pays less income tax and National Insurance. Employers that can reclaim VAT usually pass this saving on to their employees, which increases savings further. Employers also save on Secondary Class NICs (usually around 12.8%) as the amount they’re paying in wages is also lower. See for a more detailed explanation.
● Guidance on implementing a Cycle to Work scheme can be found at
● Employees can find a calculator indicating how much they might save by participating in the cycle to work scheme at
● A salary sacrifice arrangement can have an effect on entitlements to Tax Credits and other benefits and the ability to borrow money for a mortgage as this may be based on an adjusted lower salary. As well as:-
- any pension scheme being contributed to (in particular this maybe
pension scheme);
- entitlement to contribution-based benefits like the State Pension;
- entitlement to earnings-related benefits like Maternity Allowance;
- entitlement to work-related payments like Statutory Sick Pay
● The salary sacrifice will apply for the hire period even if the bicycle is not collected or used until after the hire period has begun.
● Employees cannot change the selection of bicycle during the hire period.
● To be eligible for the Income Tax and National Insurance savings, the bicycle should be ridden more than 50% of the time during trips to work or in connection with work journeys. Please see the Cyclescheme leaflet for more information on this requirement.
● If the bicycle is not used as above, the employee will pay tax on the benefit of having a bicycle provided by (name of organisation) – this will be a tax of 20% of the value of the bicycle.
● If the employee leaves (name of organisation) during the hire period, they will have to pay the unpaid balance of any outstanding hire payments from their net pay. This amount will be deducted from their outstanding salary payments. If this is not possible or their outstanding hire payments exceed their outstanding salary payments, (name of organisation) will require settlement of any outstanding amount prior to their last working day. The bicycle will belong to (name of organisation) and they may have the opportunity of purchasing it at the date of leaving.
● The bicycle purchased under this scheme must be used by the employee entering the hire agreement and it will only be possible to obtain an adult bicycle and associated safety equipment.
● Employees should wear a bicycle safety helmet and appropriate protective clothing when using the bicycle.
● Employees are responsible for any liability for loss, damage or injury arising from or in connection with the use of the bicycle and employees should ensure that they are covered by a current insurance policy in this respect.
● Due to the cash-flow effect of this policy, organisations may wish to consider the maximum they want to spend in total on this scheme and limit the number of opportunities to participate accordingly. As an example: there might be a maximum of 10 employees able to access this scheme in any 12 month period commencing 1 April – allocated on a first come, first served basis with a maximum commitment of £3000 each year in total from the employer allowing each employee £300 each.
● A record of the number of employees taking advantage of this scheme will be maintained to ensure that (name of organisation’s) cash flow position is taken into account.
● The scheme does not form part of the employee’s terms and conditions of employment.
1