Cyclescheme - tax free bikes for work

UCLan are pleased to be working in conjunction with Cyclescheme (http://www.cyclescheme.co.uk/) to provide tax free bikes for work.
 

What is the scheme?

The scheme is based on a salary sacrifice agreement between UCLan and its employees and is fully compliant with the Office of Fair Trading (OFT), the Dept. for Transport (DfT) and HM Revenue & Customs guidelines. This is a Government sponsored tax break where the employer buys the bike and safety equipment and the employee pays them back via an agreed temporary wage reduction or salary sacrifice from gross income. As this sacrifice is from taxable income, individuals pay less Income Tax and National Insurance contributions.

The tax exemption only applies when an employee uses the bike mainly (i.e. more than 50% of its use) for commuting journeys or business trips. However, the bike can also be used for additional leisure journeys.

Who are Cyclescheme?

Cyclescheme works in partnership with a 1000 independent bike shops across the UK which have, to date, supplied 25,000 quality, tax-free bikes and equipment for work. Using local independent bike shops means employees have access to expert advice for selecting quality bikes fit for the purpose of cycling commuting. The scheme also supports local businesses in Preston.

Cyclescheme provide a simple and efficient on-line ordering service for employees and secure intranet pages from which Payroll can manage individual orders.

A comprehensive list of frequently asked questions regarding Cyclescheme can be found here. Please refer to these in the first instance.

How does the scheme work at UCLan?

The employee hires the bike and UCLan reduces their salary over 12 months.

At the end of the hire period employees may have the opportunity to buy the bike package at a ‘Fair Market Value’ as determined by HMRC’s Valuation table (introduced August 2010).  Transfer of ownership is administered by Cyclescheme under a separate ‘Modifying Agreement with Continuation Deposit’ whereby the employee continues to hire the bicycle for a period of up to 4 years without transferring ownership, in return for a one-off ‘Continuation Deposit’.  Extending the 'Hire Period' reduces the value of the bicycle in line with the 4 Year valuations in HMRC’s table of 3% (for bikes less than £500) and 7% (for bikes over £500) including VAT.  The ‘Continuation Deposit’ will be equivalent to the ‘Fair Market Value’ so no further payment will be required at the transfer of ownership stage.  For more information, please see the cyclescheme employee FAQs.
 

Eligibility criteria

Individuals can join the scheme provided that they:

• have a contract of employment with the University for at least 3 weeks from the date of application
• earn more than the National Minumum Wage after their wages have been reduced
• Please note: The scheme is subject to the availability of central funds

What savings will I make?

Income tax and NI saved will depend on your personal level of taxation.A savings calculator can be found at http://www.cyclescheme.co.uk/a1cf8 or enter the employer code a1cf8 at http://www.cyclescheme.co.uk/ Please note that UCLan are unable to reclaim VAT. An example of savings made for a £1000 bike package is given below.

How do I apply?

o Locate your nearest Cyclescheme partner shop at http://www.cyclescheme.co.uk/
o Visit the shop and choose your bike and safety equipment - you will be given a paper quote
o Enter your quote online at www.cyclescheme.co.uk/voucher/uclan
o Payroll will check your eligibility
o A hire agreement will be sent to you electronically
o Complete the hire agreement and return to Cyclescheme
o A secure voucher will be sent to your home address
o You redeem the secure voucher in the bike shop on production of photographic ID

Please note that the voucher must be applied for by close of business on 10th of the month at the latest for the sacrifice to commence in that same month. The process from application to receiving your bike can take up to 4 weeks.

Maximum value of bike package

The maximum value of the voucher is £1000 (inc. VAT). If any additional safety equipment exceeds this amount you will need to pay the excess direct to the shop and make the voucher out to exactly £1000.

Insurance & Maintenance

Both maintenance and insurance of the bike during the hire period is your responsibility. See Cyclescheme FAQs for advice on insuring your bike.

Leaving the scheme

If you leave employment with UCLan before the end of the 12 month hire period you will be required to pay all outstanding monies before you leave. The outstanding amount will be deducted from your final net salary as a termination fee. If your bike is stolen or is damaged beyond repair you have effectively left the scheme and must pay all outstanding amounts from your net salary. In these instances you will not benefit from tax savings on the outstanding balance.

Pension & other benefit Implications

• Universities Superannuation Scheme
• Teachers Pension Scheme
• Local Government Pension Scheme
  

Employees will continue to pay contributions based on their salaries before salary sacrifice. This will maintain the level of benefits in the event of death in service or ill health retirement. The level of employer contributions will not be affected.  Occupational benefits, such as overtime, maternity or sick pay, will not be affected as they are based on the pre-sacrifice salary.  State benefits, such as Statutory Sick Pay, Statutory Maternity Pay or Statutory Redundancy Pay, will be affected as they are based on the post-sacrifice salary.

Further Information

If you have more queries regarding the scheme please visit Cyclescheme FAQs or http://www.cyclescheme.co.uk/ in the first instance.

For UCLan specific enquiries contact; Karen Hawkins, Payroll Supervisor, kehawkins@uclan.ac.uk Tel 2209 or Clair Challen, Travel Plan Coordinator, cchallen@uclan.ac.uk Tel. 2052