All that has happened is that the current guidance confirms what some providers have been doing for several years.The scheme normally operates by the employer buying a voucher from the scheme provider which can be used by the employer in participating retailers. The update ensures all riders can now get everything they need to cycle commute, on the scheme - including products like e-bikes which had often been precluded due to their price tags.The Government has updated the scheme guidance - find out what it means here.No, employers can set their limit at any value they see fit.
This was almost impossible using the original scheme. Since the scheme launched twenty years ago we've seen the price of the trusty Brompton folder increase dramatically - this iconic and perfectly formed machine is at the heart of every cycle to work scheme or green commute.This means that although the savings haven't increased or changed employees will now be able to save more on bikes or cycle to work packages with a value over £1,000.Your employer has registered with Cyclescheme. Cycle to Work scheme is a UK Government tax exemption initiative introduced in the Finance Act 1999 to promote healthier journeys to work and to reduce environmental pollution.It allows employers to loan cycles and cyclists' safety equipment to employees as a tax-free benefit. Result? This move makes it easier than ever before for employers to provide staff with cycles and equipment including e-bikes worth over £1,000. The deductions from the employee’s salary are then used to reimburse the employer for this initial outlay.Unsurprisingly, 94% of people within a cycle to work scheme take option 3.This year, the cycle to work scheme has had the biggest shake-up since the scheme began, with the removal of the £1,000 cap on tax-free cycle purchases.As the scheme is for “active travel”, there is no reason why an employee couldn’t use the scheme to hire two bikes, one for each end of a train journey commute, for example.After the final payment period, the employee can do one of three things:The schemes are most often provided through a third party and work as follows:My own firm operates a cycle to work scheme and has seen a decent take-up among staff. Now, colleagues will hire their bike directly from Cyclescheme. This has meant that e-bikes have been beyond the reach of the scheme, as the vast majority of them cost more than £1,000.If you want to buy the bike after 12m of use you have to pay 25% of its value which basically wipes out all of your tax savings. Up until now, most employers have imposed a £1,000 limit of the scheme because, if it is exceeded, a consumer credit license is needed. Traditionally the scheme has always been capped at £1,000.00 as a maximum package value but thanks to the Cycle 2 Work Alliance this has now been changed to allow employers to choose their own limit to better suit the needs of their employees. You could do this because of the Financial Conduct Authority's (FCA) exemption that allows employers to loan their staff cycling gear worth up to £1,000. Because I think that the prospect of paying for somthing (even with the pre-tax money) and not owning it is ridiculous.This is actually nothing new. This year, the cycle to work scheme has had the biggest shake-up since the scheme began, with the removal of the £1,000 cap on tax-free cycle purchases.
Sadly, the scheme is not available for the self-employed.The scheme is open to bikes for “active travel”, so if you are a lycra-clad ironman then the scheme cannot be used to get you a super-aero disc wheeled triathlon bike that is only used when you race six times a year.From a user’s perspective and as a keen MAMIL (middle-aged man in lycra) myself, I would have no hesitation in recommending the scheme to my clients.While cycling can be a polarising topic, when you examine the positive impact it has made on other European cities the government’s latest initiative to extend its cycle to work scheme makes sense in many ways.Simon Denton comments on the biggest shake-up the cycle to work scheme has seen since its inception, as the government lifts the cap on the value of bicycles which can be provided.The employee enters a hire agreement for 12 months where a monthly payment equal to 1/12 of the price of the bike is agreed.
Twenty years after its inception, the government have announced updated Cycle to Work Scheme guidance removing the £1,000 price cap. Larger savings will be made by employees whose taxable income is between £50,000 and £60,000 and who receive child benefit, as well as employees whose taxable income is between £100,000 and £125,000.