Cycle-to-work in review

Time reveals the losers in Cycle-to-work schemes

Cycle-to-Work, a government initiative, is aimed at encouraging employees to cycle to their places of work by providing affordable bikes – but a few flaws are becoming apparent with the scheme.

The basic idea is that employers can provide funds for their employees to purchase a new bicycle and appropriate safety equipment, which is then loaned to the employee. In return, the employee makes regular small payments from their salary to cover the scheme’s cost.

As long as the main use of the bike is for travel to work, no income tax or National Insurance is incurred on the payments, which are made for a set period of time. Employees may also buy the bike at the end of the scheme for a fee. 

The problems begin with eligibility – a recent petition on the 10 Downing Street website asks for military personnel to be allowed to access the scheme, while self-employed workers are denied because they lack a PAYE salary. 

People on or near minimum wage cannot take part in the ‘salary sacrifice’ either, effectively making the scheme unavailable to them. It’s because the sacrifice would take them below the level of minimum wage, making their earnings illegal.

And your employer has to be willing to take part and cope with the inconvenience of the admin involved. They may be able to reclaim VAT on the bike and equipment as well, but not all pass this back to their employees.

Choice is often restricted too. Those wanting to get a high quality steed could be hampered by the £1,000 limit (top-ups aren’t possible normally, though electric bikes are available within the scheme), while employers may pick a specific provider to handle the scheme for them, reducing the number of bikes available.

Finally, if you leave the employer or are made redundant before the end of the agreement period, you’re still liable for the remaining salary deductions. 

But we’re sure that this is not an exhaustive list – have you encountered any problems we haven’t covered here? Why not note your experiences in the comments below?

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