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Introduction | ||||||
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Finance Department Structure | ||||||
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Financial Management | ||||||
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Management Accounting | ||||||
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Finance Development Section | ||||||
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Procurement Office | ||||||
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Information Development | ||||||
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Strategic Development | ||||||
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Bike to Work
Salary Sacrifice Scheme
RE-LAUNCH OF SALARY SACRIFICE BIKE TO WORK SCHEME (DECEMBER 2011/JANUARY 2012)
After the considerable success of the Bike-to-Work scheme to date, the University is re-launching the scheme in December 2011/January 2012. This further extends the University’s aim of enhanced employee benefits.
In excess of 135 members of staff have availed of the scheme since its launch and feedback indicates that there has been a high level of satisfaction with the considerable savings that have been achieved, as well as the additional benefit of healthier journeys to work and a contribution to reduced environmental pollution.
How does the Bike to Work scheme work?
The 1999 Finance Act introduced an annual tax exemption, which allows employers to loan cycles and cyclists' safety equipment to employees as a tax-free benefit. The exemption was one of a series of measures introduced under the Government's Green Transport Plan. Under this scheme, the employee agrees to accept a lower amount of salary, in return for the employer's agreement to provide the loan of a cycle and cyclists' safety equipment.
For example, if it is assumed that the employee is loaned equipment worth £1,000.00 over a period of twelve months they could sacrifice £83.33 per month from their gross salary. Net of tax and NICs this would be £57.99 for a basic rate taxpayer (20% income tax plus 10.4% NICs) and £48.33 for a higher rate tax payer (40% income tax plus 2% NICs).
|
Basic Taxpayer
20% tax and 10.4% NI |
Higher taxpayer
40% tax and 2% NI |
|
|
Cost of hire |
1,000.00 |
1,000.00 |
|
Hire Term |
12 months |
12 months |
|
Monthly deduction |
83.33 |
83.33 |
|
Less tax saving |
-16.67 |
-33.33 |
|
Less NI saving |
-8.67 |
-1.67 |
|
Monthly net reduction |
57.99 |
48.33 |
|
Total cost after tax savings |
695.88 |
579.96 |
*Table based on NI code D
Can the employee keep the cycle at the end of the loan period?
The University will transfer ownership of all bikes & equipment to Cyclescheme at the end of the 12 month hire period. Cyclesheme Ltd will then engage each staff member in a process that fully complies with HMRC guidance in relation to the transfer of ownership between Cyclescheme and the staff member.
Cyclescheme will provide employees with three options:
1. Purchase the bike in line with the HMRC Valuation Table guidelines after 12 months.
http://www.hmrc.gov.uk/manuals/eimanual/eim21667a.htm
2. Sign up to an 'Extended Use Agreement' which extends the hire period by 3 years and then purchase the bike using the HMRC Valuation Table. There will be no further salary sacrifice deductions made via payroll after the original 12 month hire period.
3. Return the bike to Cyclescheme.
For more information on the transfer of ownership process you can view the FAQ section here (http://emails.cyclescheme.co.uk/files/mvemployeefaqsV3.pdf) or alternatively contact Cyclescheme on 0844 879 5101.
What now?
Employees can access the scheme from Monday 12th December 2011. The cut-off point for the receipt of applications is Wednesday 11th January 2012.
Bike to Work - Employee Communication Document