Unlocking the Benefits of the Cycle to Work Scheme in 2023
Are you ready to unlock the potential savings and benefits of the Cycle to Work scheme in 2023? In this guide, we’ll take you through everything you need to know about the government-backed initiative, from understanding the scheme to maximising your savings. Let’s dive in!
Short Summary
- The scheme is a government-backed salary sacrifice scheme to promote healthier journeys and reduce environmental pollution.
- Individuals can save up to 39%, depending on their tax bracket.
- The scheme is also a great way to get into cycling, adopt a healthier lifestyle, and positively impact the environment.
Understanding Cycle to Work
The Cycle to Work scheme is a government initiative to encourage commuting by bike. It allows UK-based PAYE employees to save up to 39% on new bikes and other cycling equipment.
How it works
With this scheme, your employer purchases the bicycle, and you can access it through a salary sacrifice scheme. The cost of the bike and cycling equipment will be deducted from your gross salary, saving you money on tax and National Insurance contributions.
The standard Cycle to Work hire period is typically 12 months. During this time, the employer remains the legal owner of the bike, and you pay the monthly payments via the salary sacrifice scheme. At the end of the hire period, you can choose to purchase the bicycle, often at a significantly reduced cost.
Eligibility
To be eligible for the scheme, you must be a PAYE employee aged 16 or over, and your employer must be signed up to the programme. If you meet these criteria, you can get started and access the most cost-effective way to purchase a new bike and other cycling equipment.
How to apply
You can apply directly through Cycle2Work with an employer code or access the scheme through your employee benefit portal. Multiple scheme providers are available, so to find out which provider your employer works with, you can talk to your HR department.
Calculating Savings
The Cycle to Work, salary sacrifice scheme, reduces your gross salary, so you’ll save money on tax and National Insurance contributions. The tax savings you can make through the scheme depend on your tax bracket and the value of the new bike and equipment you choose.
Tax bracket impact
Tax brackets play a significant role in determining the savings you can achieve with Cycle to Work. Standard-rate taxpayers can expect to save between 25% and 29%, while higher-rate taxpayers can expect savings of between 35% and 39%.
The Cycle to Work calculator
To help estimate your potential tax savings, you can use the Cyclescheme calculator.
It’s important to note that decreasing your gross salary through the scheme may affect other benefits, like statutory sick pay and your pension pot, so consider all implications before making a decision.
Choosing a Bike
The primary goal of the Cycle to Work scheme is to encourage employees to use their new bikes for commuting, but the type of bike you buy is up to you.
All types of bicycles are available through the scheme, from road and mountain bikes to electric bikes and folding bikes, so you can choose one that best suits your needs, whether it’s commuting, exercise, or recreation.
Buying your new bike
When it comes to purchasing your new bike while you’re generally free to choose whichever new bike you want, some employers or scheme providers may have a price limit for Cycle to Work scheme purchases, so it’s always best to check.
If you’d like to take advantage of the Cycle to Work scheme to buy an electric bike, why not take a look at our range of e-bikes? With folding e-bikes and electric mountain and road bikes, there are plenty of options to choose from.
Cycling equipment
The Cycle to Work scheme doesn’t just cover the cost of a new bike. It also includes new cycling equipment, accessories and safety equipment. Eligible accessories include helmets, lights, tools, cycling clothing, spare parts and components, and more.
Rear-mounted child seats and trailers are also eligible, so the whole family can enjoy a safe and enjoyable cycling experience.
The End of the Hire Agreement
When the hire period ends, you can return the bike, pay a fee based on its fair market value, or extend the agreement at no additional cost. To assume ownership after 12 months, there is an end-of-hire payment based on the bike’s original value.
Additional Benefits of the Cycle to Work Scheme
The Cycle to Work scheme offers significant benefits beyond the financial savings on bikes and equipment. As well as providing an affordable entry to cycling and helping you save on transport and fuel costs in the longer term, participating in the scheme can help you to live a healthier and more environmentally conscious lifestyle.
Physical and mental health benefits
Choosing to cycle to work increases your daily physical activity and is an excellent form of exercise, and cycling has also been found to provide mental health benefits. Incorporating cycling into your regular routine can enhance your overall well-being.
A more sustainable option
By choosing to cycle to work instead of using a car or public transport, you’ll reduce your carbon footprint, helping to reduce pollution and promote a greener future.
Summary
The Cycle to Work scheme in 2023 offers a fantastic opportunity for UK-based PAYE employees to save money on new bikes and cycling equipment while promoting healthier choices.
By choosing to cycle to work instead of taking the car or public transport, you’ll not only reduce your carbon footprint and environmental pollution and have a healthier daily commute. So, why wait? Get started on your cycling journey today and experience the incredible benefits of the Cycle to Work scheme for yourself.
