freetown sports cycle2work scheme
faq - employer's questions
Who does the bike belong to?
It belongs to the company for the 12-month period of the salary sacrifice. At the end of this period, the company may transfer title of the goods.
How much will this cost the company?
Nothing, it is free to the employer. The company is buying the bike, then leasing it back to the employee until the full amount is recovered. You will even save money by not paying your employer's contributions of the amounts that would have been deducted for national insurance.
Does the company need to apply for dispensation from the Inland Revenue or from HM Customs & Excise to run the Cycle2Work programme?
No. As long as all Cycle2Work forms are completed correctly, there is no need to apply for an official dispensation.
Does my company need to apply for a credit licence?
No. Companies are allowed to run salary sacrifice schemes without a specific credit licence as long as the purchase amount doesn't exceed £1,000.
Can we use the Cycle2Work programme even if we are not VAT registered or exempt from VAT?
Yes, there are still savings to be made, even without being able to reclaim the VAT.
I'm self employed, can I join the Cycle2Work scheme?
You must be paid via PAYE to make the salary sacrifice.
Important points to be aware of:
- Bicycles bought under the Cycle2Work programme must be used primarily for commuting, and so must be suitable for that purpose
- VAT may be reclaimed on bicycles if they are purchased to implement a green travel plan, reduce car use or increase staff health levels
- Leavers or retirees from your company become responsible for any outstanding amounts. These are usually subtracted from final salary payments, and become a taxable benefit
- At the end of the lease period, the employer may transfer title of the goods to the employee