What is the Cycle to work Scheme?
The Cycle to Work Scheme is part of the Government Green Transport Plan aimed to promote healthier journeys to and from work, reduce air pollution and make cycling more affordable and accessible for commuters and leisure riders.
Available to PAYE employees, it enables savings of between 25% and 42% to be achieved on Recommended Retail Prices for new bikes and qualifying accessories.
The scheme allows employers to loan their employees cycles and cycling equipment as a tax-free benefit. It is important to note that the tax break is on the use of the bike, not ownership.
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How much can I save?
How much you save depends on how much you earn and therefore how much tax you pay
- Basic rate tax payers (those earning less than £50,000) will save minimum 25%
- Higher rate tax payers (those earning more than £50,000) will save 42%
- Additional rate tax payer (those earning more than £150,000) will save 47%
- In addition, the employer will save 13.8% on reduced NICs
Once the employee accepts a salary sacrifice, their overall pay (cash element) is lower, so they pay less tax and NI. In addition, the employer will not have to pay Employers’ NI contributions on the salary sacrificed. Cycle to work scheme is a tax-free benefit.
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