Posted on Oct.05, 2016 by awaller in Latest News
Employers with an interest in their employees’ health can also provide a useful tax incentive by participating in the government’s Cycle to Work scheme.
The scheme involves employers buying a bike on an employee’s behalf and charging the employee for its use. The monthly payments are deducted from the employee’s gross salary so that no tax or National Insurance is paid on the value of the benefit. No interest is payable, and payments are usually spread over 12 to 18 months.
The higher the tax bracket of the employee, the greater the value of the perk. Someone earning £100,000 p.a.
whose employer buys a bike for £1,000 would save £418, while the benefit to someone earning £30,000 would be £319. Group schemes, benefiting from bulk purchasing terms, are available to employers with a number of participating employees.
It is a condition of the scheme that the bike should be used for at least part of the journey to work.
The bike belongs to the employer at the end of the payment period but some schemes allow the employee to continue using the bike for a token deposit and others allow the employee to buy the bike for its market value.
For more information, please contact one of our advisers.