Frequently asked questions
Are there eligibility criteria for employees?The Scheme is open to all full, part-time and contract staff who are paid through the company payroll and whose term of employment is more than the period of the hire. Your salary needs to exceed the national minimum wage after the cost of the bike and equipment is deducted in order to qualify for the scheme. If you do not meet this requirement you should consult your employer about having a bike and equipment made available to you outside the salary sacrifice arrangements.
To take advantage of the tax benefits that result from salary sacrifice...
- You need to be a UK taxpayer via the PAYE system.
- You need to be earning more than the National Minimum Wage after your wages have been reduced in order to make the full tax savings available.
How often does the bike have to be used for work?
By taking part in the Tax Free Cycle scheme you are confirming that more than 50% of the bike’s use will be for qualifying journeys to either your usual place of work or another location where you perform your duties e.g. another office of your employer, or place you visit for business purposes. You are not required to keep a detailed record of the use of your bike, neither is your employer. However, it is mandatory that you use your bike for work-related journeys for the majority of its use. The bike can be used for leisure whenever you wish.
What is the hire period and when do I own the bike package?
The hire period is considered to be the time over which you are still paying your employer for the bike package (typically 6-12 months). You have full use of the bike and equipment during this time and are responsible for the insurance, storage, security and maintenance of it. At the end of the agreed hire period, you might be offered the opportunity to purchase the bike.
Does my employer require a Consumer Credit License?
The Office of Fair Trading has issued a blanket consumer credit license to all participating employers buying bike packages up to £1,000. Once the Hire Agreement has been signed, the resulting relationship is defined under the terms and conditions of the Consumer Credit Act 1974. If your employer wishes to supply bikes over £1,000 then they will need to buy a standard consumer credit license from the OFT.
Can I enter the scheme if I'm self employed or a contractor?
You can participate in the scheme if you are paid via PAYE through the company payroll.