Cycle 2 Work
Cycle to Work scheme is a UK Government tax exemption initiative introduced in the Finance Act 1999 to promote healthier journeys to work and to reduce environmental pollution. It allows employers to loan cycles and cyclists' safety equipment to employees as a tax-free benefit.
We are pleasded to be able to offer our bicycles through the Cycle To Work scheme operated by Green Commute Initiative.
Most employers currently have a limit of £1000 that they will put in place for their employees but we have partnered with GCI who, as an FCA accredited organisation, are able to operate a C2W scheme with no practical upper limit.
The Cycle to Work scheme is a UK Government tax break introduced in 1999 to promote healthier journeys to work and to reduce environmental pollution. It allows employers to loan cycles and cyclists' safety equipment to employees as a tax-free benefit.
In effect, your employer pays for the package on your behalf and you then repay them over 12 months by accepting a reduced salary in exchange for the benefit of the package.
To receive the tax break, HMRC rules mean you will be hiring the bike through Green Commute Initiative Ltd (GCI). GCI is authorised and regulated by the Financial Conduct Authority which is why GCI is the only scheme not restricted to the usual £1,000 limit. The bike is yours to use and keep and at the end of the scheme, following HMRC rules, ownership can pass to you. Unlike other schemes there’s ‘no sting in the tail’ final transfer ownership fee, just a simple payment of £1.
How the scheme works
- First choose your new bike and any accessories required. This is called the ‘package,’ which you tailor-make to meet your requirements. The package you put together will obviously contain a bike but you can also include safety equipment, such as accessories and spares.
- Once you’ve chosen your package and have a confirmed price, you need to enter that information on the GCI website; either through the Instant GCI form (or if your employer is already registered with CGI, through our Corporate GCI page).
- If you’re using Instant GCI, a Pro-forma invoice is generated for a GCI voucher to cover the cost of the package. You will need to take this pro-forma invoice to your HR department so payment can be made to CGI, who then in turn make payment to Shand.
- If you are using Corporate GCI, your request will be sent to your HR department for approval and payment for a GCI voucher to cover the cost of the package.
- After your employer has paid GCI for the voucher, you’ll need to reimburse them. They reduce your gross (before tax) pay by the value of the voucher. This is called salary sacrifice and means you don’t pay tax and NI on the amount of salary you sacrifice. Depending on your tax rate, you’ll save either 32%, 42% or 47% on the cost of the package. If you have paid a deposit to Shand, this will be refunded to you when you receive your bike. Your employer will also make a small saving by not paying NI on the Cycle to Work payment.
- You can normally choose a 6, 12, 18 or 24-month repayment period; it’s up to your employer how long it will be for. Chat with them to reach a timescale you are both happy with.
- Due to HMRC rules GCI must initially hire the bike to you. This is because the hire agreement is always for 12 months and if ownership were transferred to you at the end of this period, you would be liable to a benefit in kind charge from HMRC. Instead GCI provide the bike to you as a free-of-charge loan that means you continue to benefit from the tax break with no HMRC penalties.
- After five years you can buy the bike from CGI for £1. This is charged so that GCI can demonstrate to HMRC when the transaction took place and protect you from any future HMRC claim. In practice the bike is yours to do as you wish from day one and you can enter into additional or new GCI schemes at any time.
More information can be found on the GCI website with some useful FAQs about the scheme to be found here: https://greencommuteinitiative.uk/faqs
You can find out what you can save by using the GCI calculator here: https://greencommuteinitiative.uk/savings
To get started or have any questions about the Scheme, contact us to get the ball rolling.