Since 1999, the UK government has been encouraging people to cycle to work by offering tax breaks writes Wes Scales , Partner at Mark J Rees LLP.
The way the Cycle to Work Scheme operates is pretty straightforward. As an employer, you purchase a bike on an employee’s behalf and lend it to them under a hire agreement. You then deduct payments monthly through a ‘salary sacrifice’ – taking the cash out of gross pay before tax and NI are deducted.
Effectively your staff member pays less to HMRC each month for the period of the arrangement. And, as an employer, you save on NI too, so recoup about 13% of the cost of the bike.
Typically, the payments from staff are taken over a 12 to 18-month period interest-free.
Many companies see the scheme as a way of demonstrating their commitment to reducing carbon emissions. But in addition to the positive impact on the environment, your staff members can get fitter by cycling to work rather than sitting behind the wheel of a car or in a crowded train.
They’ll feel happier, as they’ll be keeping fit and spending more time in the sunshine. And, of course, it’s well established that people who exercise regularly are less likely to suffer from heart disease, diabetes and high blood pressure.
If health and wellbeing isn’t enough of a push to get your staff on two wheels, what about the cost of car ownership? The RAC estimates that it costs the average person £5,869 to run a car – most of which is spent on fuel.
Last, but by no means least, more people riding bikes is good news for the planet. It takes 20 times the materials and energy to build a car as it does to build a bicycle. And then there’s all the pollution that motor vehicles generate.
So why not consider taking advantage of a scheme in which everyone wins? Your business, your staff members and the wider environment all benefit directly when people start cycling to work.
For further assistance and queries in implementing the scheme please email firstname.lastname@example.org