What is Tax Free Cycle
The government have created a tax break for UK taxpayers allowing employers to hire a new bike, safety accessories and clothing to employees, without incurring a taxable benefit in kind, to encourage more commuting by bike. Additionally, where the hire charge is paid through an agreed salary sacrifice with your employer (usually over 12 months), you make savings on Income tax and National Insurance.
The hire charge is the equivalent of the cost of the bike and equipment and is paid via salary sacrifice, which enables you to benefit from Tax and National Insurance exemption on the sacrificed salary. At the end of the hire period a decision will be taken by your employer on the options available, one of which may be to offer you the opportunity to buy the bike and safety equipment.
How do I register for Tax Free Cycle?
Because the scheme operates through a salary sacrifice, employers need to register in order to offer this scheme to their employees. Registration is online so very quick. We ask that a company director, or an HR representative responsible for managing staff benefits completes registration. Once checked we can set you up to start taking advantage of Tax Free cycle.
It couldn't be easier!
- Have your HR department register for Tax Free Cycle by following the link below
- Choose your bike and safety equipment by visiting one of our stores or www.cyclesurgery.com
- Request your Tax Free Cycle voucher online through a secure site
- Monthly hire payments start when the voucher is issued
- Save the income tax and national insurance on the monthly hire payments
How much can I save?
By paying for the hire of the bike and safety equipment through your salary sacrifice you will save the Tax and National insurance on this cost. Therefore depending on your taxable income, you can save either32% as a standard tax rate payer, or 42% as a higher tax rate payer compared to paying the hire charge out of your already-taxed earnings. Do note, however, that in the event that you are offered the opportunity to purchase the bike after the end of the hire period and you take up this opportunity, the fair market value that you would have to pay would reduce this saving to 10-20% on average.