Instant Cycle to Work

Transcription

1 Instant Cycle to Work Employee Guide Instant Cycle to Work

2 Employee Guide Save up to 42% off a new bike! Your employer is taking part in the Government s Cycle to Work scheme, which can save you up to 42% of the retail value of a bicycle and accessories (depending on your tax bracket). If you wish to join the scheme, follow the Getting Started guide on the following page. You will be able to choose between Halfords or an Evans and once you have completed the application process you will receive a voucher via for your chosen value. You can use your voucher to purchase both a bicycle and safety equipment You will pay for the bicycle and accessories in easy installments, through payroll, over a 12 month period. The installments will be deducted from gross pay, not net pay, which means you save tax and national insurance on the value of the bike and accessories. Example Savings Example: Cost to you Basic Rate Taxpayer Higher Rate Taxpayer Retail value of Bicycle Assuming: Assuming: and Accessories 20% Tax 12% NI 40% Tax 2% NI Cycle to Work Helpline

3 Getting Started If you would like to take part in the scheme, it is important that you fully understand the scheme before applying. Please note that once the scheme starts, it is not possible to cancel. Please follow the process below 1 Choose your voucher value and retailer Firstly we advise that you visit the retailer of your choice (Halfords or Evans Cycles) and choose your bike & accessories. Once you have made your decision, tell your employer the total value that you you wish to apply for. You can choose any value between 100 and 1,000. It is worth noting that once you have decided on your amound and have received your voucher, you will not be able to top up the voucher with cash or exchange any remaining balance for cash - you must use the full voucher amount. 2 Sign your agreement Once your employer has submitted your application on your behalf, we will produce a hire a greement between you and your employer. The agreement will specify the value to be deducted from your salary over a period of 12 months. Your employer will receive this agremeent and ask you to sign it. Please note that during the term of the agreement your employer will own the bicycle but you will be responsible for maintaining and insuring the bicycle. Following the end of the agreement period the ownership can be transferred to you. 3 Getting your voucher Once the agreements have been signed, your cycle voucher, in the form of an , will be sent directly to you. You are then free to go and purchase your bike and accesories from your chosen retailer.

4 Frequently Asked Questions Where can I get my bike and accessories? You can choose either Halfords of Evans Cycles to supply your bike. Please note that you can also use both Evans and Halfords vouchers at a network of independant retailers. For an up to date list, please contact the Cycle to Work team on What if I can t get to the retailers store? Halfords - if there is not a Halfords store near you or if you are unable to get to a store, please contact the Halfords Cycle Team on to arrange home delivery. You can view their range on Evans Cycles- if there is not a Halfords store near you or if you are unable to get to a store, please contact the Evans Cycle Team on to arrange home delivery. You can view their range on What can I use the bike for? For the 12 months of the scheme, at least half of the journeys made using the bicycle should be between your home and your place of work. The use could cover a leg of your journey, for example, from home to your local train station. Once the scheme has finished and if you keep the bicycle, the bicycle can then be used for any purpose. Please note that there is no requirement on you or your employer to keep any records of journeys made. Can I cancel part way through the scheme? Once you have signed and returned the agreement, you will not be able to cancel the scheme part way through. The salary sacrifice will continue for the full period of the agreement unless you cease employment with your employer before the agreement finishes. What happens if I leave the company before the scheme finishes? If you cease to be employed by your employer for any reason you will have to pay to your employer the amount by which your salary would have been reduced for the remainder of the scheme period. This will normally be deducted as a lump sum from your final net pay. Therefore, you will lose the tax and national insurance savings on this lump sum. Your employer may offer to sell the bike to you when you leave and to understand the implications of this please read the FAQ Who owns the equipment and what happens at the end of the agreement? Who owns the equipment and what happens at the end of the agreement? During the period of the agreement, the ownership of the bicycle remains with your employer. You must not sell or otherwise dispose of it. At the end of the agreement, typically 12 months you will be offered the bike at the current market value. Your employer may choose to follow the values as prescribed by HMRC which can be found at

5 Do I need to insure the bike myself? Whilst you do not own the bicycle for the 12 month term of the agreement, you must insure the bicycle as you are responsible for any loss, damage or theft and if applicable, note your employer s interest. You will be liable for the full value of the hire payments regardless of your / the circumstances once you have signed the agreement. What is Salary Sacrifice? In return for your employer providing you with bicycles, you are agreeing to give up (sacrifice) part of your salary. This is a variation to the terms of your contract of employment, which allows your employer to provide you with the equipment free of income tax and national insurance. What are the implications of Salary Sacrifice? Because you are agreeing to a reduction in your salary for the duration of the scheme, your entitlement to certain benefits of employment may be affected. The effect is likely to be small but you should consider the following and seek further advice if you have any questions: Employer Pension - Certain pension schemes may be affected (this may be important if you are approaching retirement and are in a final salary pension scheme) If you have any concerns, you should ask the pension scheme administrators for further information, which will be specific to your circumstances. State Pension - If you have paid enough national insurance contributions on your income, your Basic State Pension will not be affected. If your earnings fall between the Lower Earnings Threshold and the Upper Earnings Limit, your entitlement to the State Second Pension may be affected. For advice regarding state pensions, you can visit your local Social Security Office or Pensions Centre. Statutory Benefits When you sacrifice part of your salary, the calculations for the higher rate of Statutory Maternity Pay, Adoption, Paternity or Statutory Sick Pay will be affected. This is because these statutory benefits are calculated on your salary after the salary sacrifice. Statutory benefits at the lower rates may remain unaffected. If you have any concerns regarding the effect of a salary sacrifice on your benefit entitlements, you can either visit your local Social Security Office or you can visit the website National Minimum Wage A salary sacrifice agreement cannot be entered into by any employee if the result is to take the hourly pay below the National Minimum Wage. The National Minimum Wage applies in bands for those aged 16 and over. The wage rates are revised on 1st October each year. The current rates can be seen at Whilst you may not be able to enter into a salary sacrifice agreement, you may still participate in the cycle to work scheme. If you think you may be affected, please speak to your employer. Cycle to Work Helpline

6 1 Milkhouse Gate Guildford Surrey GU1 3EZ T E cycles@faircare.co.uk