Cycle to Work…helping your employees and your business
We all know how much sport and physical activity can benefit us, both physically and mentally, but do you know that it could also benefit you financially?
There has been a positive shift towards workplace health and well-being for employees from the Government in recent years with the introduction of new schemes for businesses. One such scheme is the Cycle to Work Scheme, that is actively encouraged by government and allows companies to pass on tax-free benefits to their employees.
Put simply, employers purchase a bike for their staff who then ‘hire’ the bike from the business with a ‘hire fee’ deducted from their gross salary. This would be set over an agreed period of time, i.e.; 12 months, and at the end of the salary sacrifice period the employee would get the option to purchase the bike from the business for a fee, determined by the market value of the bike.
With the deduction of the bike ‘hire’ from the employee’s gross salary, a basic rate taxpayer could receive national insurance and tax savings that could equal a 32% saving on the cost of a bike. This, combined with a 12-month salary sacrifice, has encouraged many businesses and employees to take up the scheme, particularly when an individual expense such as the purchase of a bike can be seen as a luxury and out of reach for many.
There are two different ways in which you can set up or get involved with a cycle to work scheme. In the first instance, you could to find a provider who runs an existing scheme to manage the scheme for you. Many high street retailers have developed their own schemes, with many having different benefits, such as free bike service checks and vouchers off cycling equipment. It would be worth having a look on the market to see if there are existing schemes that would suit your business and employees. Alternatively, you could set up and run your own scheme, managed through salary sacrifices.
As a business you determine the amount your employees can spend through the scheme. You set a limit and then your employees select the item(s) they would like and request a ‘voucher’ for the value selected. Employees can request from the following equipment, within your limit:
- The cost of a bike (including adapted bikes),
- Safety equipment such as helmets, bells, lights, reflective clothing
- Service equipment such as puncture repair kits and replacement parts
- Locks, chains, luggage carriers and straps
The business then pays for the ‘voucher’ through an online portal and it is then the responsibility of the employee to go online or in store to exchange this for their chosen bike and equipment. Following the purchase of the ‘voucher’ the business is then responsible for setting up the salary sacrifice for the employee.
Over and above the financial benefits for your business and employees, there are numerous other benefits to accessing a cycle to work scheme.
For your employees…
The physical and mental benefits of active travel and cycling to work, are huge with increased physical activity levels supporting staff to feel more motivated and productive in the workplace. An increase in endorphins from exercise will mean staff arrive at work with a higher brain function and likely more positive mental attitude, in turn they are more likely to be motivated and ready to work without the need for a caffeine kick-start!
For your business…
A cycle to work scheme can reduce staff sickness and support employee’s positive mental health and well-being. Recent research has found that the average employee misses 4.5 days through illness per year, in comparison to the average cyclist missing 2.4 days per year. Regular cycling has been found to halve the number of sick days for employees, whilst the increase in physical activity supports employee’s mental health reducing sickness and absenteeism.
For the environment and more…
More bikes and therefore fewer cars mean less need for car parking, which often causes big issues within offices, particularly when car parking spaces are limited and at a premium financially. In turn, this will also reduce congestion, with the daily commute no longer spent in traffic, but cycling down one of the many newly introduced cycle lanes across the country. Employees may also find that they can get to their destination quicker on a bike than in a car!
For more information on how a cycle to work scheme could benefit your business, please contact Byte Accounting.