Instant Cycle to Work

Transcription

1 Instant Cycle to Work Employer Guide Instant Cycle to Work

2 Employer Guide Employees save up to 42% off a new bike! Fair Care Instant Cycle to Work Schemes are a fast, simplified version of our traditional schemes, allowing employees to save up to 42% off the retail value of bicycles and accessories through salary sacrifice. You save 13.8% in employers NI The Instant Cycle to Work Scheme is aimed at smaller organisations, or employers who want to enroll individuals on an ad-hoc basis, up to 5 at one time. The scheme can be set up and processed on the same day, allowing participants to receive their cycle to work vouchers, via , within 24 hours. A brief phone call and a simple form is all it takes to activate a scheme. What is the Cycle to Work Scheme? The Cycle to Work Scheme was originally launched in 1999, as part of the Government s Green Transport Policy. The scheme allows employers to provide their employees with bicycles and safety-related accessories, free of tax and national insurance. Payment by the employee is via salary sacrifice, typically over a 12 month period. Follow the instructions on the following pages to enrol your employees onto this popular scheme! Cycle to Work Helpline

3 Getting Started You can now enroll up to 5 of of your employees at any one time. it is important to read the Process and Frequently Asked Questions on the following pages before you complete the application. Process 1 Inform Your Employees Your employees will need to undertand the process and regulations of the scheme before they apply. You will need to provide them with the Employee Guide that can be viewed online at If you would prefer a PDF copy to to your employees, please call the Cycles helpdesk on Complete The Application Once your employee has read the Employee Guide and made their bike choice, you can complete the Application Form. This can be completed online at To clarifiy, it is you the employer that should complete and submit the application. 3 We Send You The Documentation Once we have received the application, electronically, we will produce and send you the following documents in the Instant Pack The Hire / Salary Sacrifice Agreement(s) Two copies of this combined hire/salary sacrifice agreement will need to be signed by the employee and yourself. One copy must be retained by the employee and one by you. The Deduction Report This will give you the details of the amounts to be deducted through payroll. The Invoice For the value of the bicycles plus our set-up fee.

4 4 Payment Once you have received the invoice, please call us on to make payment by credit or debit card. If you prefer, we can take payment via BACS or CHAPS, and our bank details are on the foot of our invoice. However please be aware that paying by this method can slow down the process. As soon as payment is received, we will dispatch the cycle voucher via to you, which you can then distribute to your employees - they will then be free to go and purchase the bicycle of their choice when they wish. Payment Clarification We will require payment for both the face value of the cycle voucher plus our 10% set-up fee. This fee is more than covered by your 13.8% Employers NI saving, Cycle to Work Helpline

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

6 What is Salary Sacrifice? In return for your business providing your employee with bicycles, your employee is agreeing to give up (sacrifice) part of their salary. This is a variation to the terms of theircontract of employment, which allows you the employer to provide your employee with the equipment free of income tax and national insurance. What are the implications of Salary Sacrifice? Because your employee is agreeing to a reduction in salary for the duration of the scheme, their entitlement to certain benefits of employment may be affected. The effect is likely to be small but they 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 the employee is approaching retirement and are in a final salary pension scheme) If they have any concerns, you should ask the pension scheme administrators for further information, which will be specific to their circumstances. State Pension - If your employee has paid enough national insurance contributions on their income, their basic State Pension will not be affected. If their earnings fall between the Lower Earnings Threshold and the Upper Earnings Limit, their 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 your employee sacrifices part of their 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 their salary after the salary sacrifice. Statutory benefits at the lower rates may remain unaffected. 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 an employee may not be able to enter into a salary sacrifice agreement, they may still participate in the cycle to work scheme. Please call our Cycle to Work helpline for more advice in this instance. Cycle to Work Helpline

7 1 Milkhouse Gate Guildford Surrey GU1 3EZ T E cycles@faircare.co.uk