Ride 2 work
This scheme is being offered by a few cycle merchants such as Evans Cycles, and is a great incentive to get workers to choose the cycle to work rather than drive.
Tax Advantages of Ride 2 Work Schemes
The idea is that it reduces CO2 emissions whilst getting or keeping yourself fit AND it also saves you money on Tax and NI.
How? Well, your employer signs up with a Ride 2 Work Scheme provider and basically pays for the Bike, Helmet, Lights and Reflective Clothing for you. You pay this back on a monthly basis over a period of 12 months and as your payments are taken from your salary prior to deductions this results in you having to pay less in Tax and NI as there are less earnings to apply the deductions too.
For example, if you chose to buy a bike and accessories for a value of £364.96, you would not be taxed or have NI contributions applied to that amount.
This equals Tax at 22% = £69.15
NI at 11% = £34.58
VAT = £50.63
Total = £154.36
You would have £30.41 deducted from your salary each month, but overall you would be paying £8.64 less per month in Tax and NI and so you would only notice the money you take home is down by £21.77 net.
During the 12 months you will in effect, be leasing your bike from your employer but after the 12 month period has passed the bike will be your property. You may find that you have to pay a small amount to finalise the ownership of your bike, though this is not always necessary.
Terms and Conditions of the Ride 2 Work Scheme
* You have to agree that your bike will be your main source of transport to and from work, though you can still use it for leisure also.
* You cannot take out this scheme and give the bike to another member of the family or a friend.
* The bike you choose must be suitable for commuting, so mountain bikes and race bikes for example are fine, but children's bikes would not be.
* You must begin payment for the bike the month after you have it delivered or collect it from the store.
* The scheme cannot be used if after the payments have been deducted this takes your salary below the minimum wage. Non related items are not included, such as downhill helmets, energy food and car racks.
* You cannot pay the balance early or over a shorter time the commitment must last for 12 months.
* The minimum voucher on the Evans Scheme is £250 and the maximum is £1000, you can spend more but you would have to pay for the extra yourself, if you choose a cheaper bike you will still be charged for the amount printed on your voucher. Evans can actually issue vouchers for more than £1000 but your employer would need to apply for a credit licence to do this.
* You must ensure that your voucher is for the retail price as opposed to the cost after savings of the bike and accessories.
If a circumstance arises such as being off work due to maternity leave, unpaid leave, holiday or sick leave and you salary drops to or below the amount of your salary sacrifice then your employer will suspend your payments until you are earning again. If you leave the company or retire then your bike becomes a taxable benefit and the price remaining on your bike will be deducted from your final net salary.
If you think that you and some of your colleagues would be interested in participating in a scheme of this kind, mention it to your HR Department. Refer them to Evans Cycles Ride to Work Scheme or to another cycle merchant which you know are promoting the scheme, such as Bike Planet UK.