Key Points When Setting up a Bike to Work Scheme

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BICYCLE USAGE

You should make it clear to staff that at least 50% of the bicycle’s intended usage is work related. Please note that all pre-contract information provided by Edinburgh Bicycle Co-op clearly states this. The rest of the time, employees are at liberty to use the bikes as they please.

EMPLOYER’S CASH FLOW

Running a scheme where the employer pays for the bicycles upfront, then gets the money back via employee salary sacrifices, will have cash flow implications for your organisation.

If you would like to discuss no-cost-to-the-employer finance, which would enable you to spread the payments, please give us a call. (Please note that finance is normally only available to larger employers.)

Bike to Work Scheme Manager: 0131 319 2400 ext 107

General Enquiries: 0131 331 5010 or 0345 257 0808

Or email: enquiries@edinburghbicycle.com

VAT

If VAT registered, your organisation will be able to reclaim the VAT on the purchase. For instance, if the employee chooses a bike and safety equipment that come to a total of £460, you can claim £76.67 back. From January 2012, the hiring of a bicycle on a salary sacrifice scheme will be subject to VAT. For this reason, we believe it to be sensible to keep the reclaimed VAT to pay the VAT charge to HMRC during the hire period. Please click on this link for further information regarding salary sacrifice and VAT.

CONSUMER CREDIT LICENCE

Typically, employees can choose bicycles and safety equipment up to a maximum value of £1,000 under the Bike to Work Scheme. However if your organisation has a Consumer Credit License, there is no limit to the value of the bicycles and equipment your staff can choose. A Consumer Credit License can be purchased from the Financial Conduct Authority.

MAIL / TELEPHONE ORDERS

If it’s not convenient for some employees to visit an Edinburgh Bicycle Co-op shop, they can view their bike and safety equipment online at edinburghbicycle.com, then order the bicycle over the phone (0345 257 0808). Edinburgh Bicycle Co-op can then offer a simple system for processing the mail order application. The bicycle will then be delivered to the employee’s home or work address free of charge.

TELEPHONE PAYMENT

Please note that for BACS accounts, you cannot make a credit card telephone payment for a bike that was ordered instore. To prevent potential fraud, your company’s authorised person must visit the store in person to make the chip and pin credit card transaction.

TRANSFER OF OWNERSHIP

At the end of the scheme, employees will not own the bicycle or safety equipment, the employer will. This is because salary sacrifice is a hire agreement, not a purchase agreement. Transfer of ownership can take place with a one-off Fair Market Value payment if so wished.

If your organisation opts for transferring ownership of the bicycle to the employee with a one-off Fair Market Value Payment, it must be a separate agreement after the hire period is complete.

HMRC issue guidelines on calculating the fair market value of a bicycle. Please follow this link for more details.

Alternatively, the employer can choose to allow the employee to continue using the bicycle after the hire period is complete without transferring ownership. The bicycle then remains the property of the employer and, as such, can be declared as an asset in your company accounts. For more information on this option, please refer to section eight of the Department for Transport Cycle to Work Scheme implementation guidance booklet.

If you would like to discuss Transfer of Ownership and Fair Market Value Payment common practice options, please contact Edinburgh Bicycle directly.

Bike to Work Scheme Manager: 0131 319 2400 ext 107

General Enquiries: 0131 331 5010 or 0345 257 0808

Or email: enquiries@edinburghbicycle.com