Can anyone provide a link to information on the UK bike subsidy program that a number of people have mentioned?

I will be at a meeting tomorrow discussing possible provincial government initiatives to reduce greenhouse gas emissions and I would like to suggest that kind of program as a way to promote bicycle use.

I would also be interested in any similar programs elsewhere.

David

http://www.cyclescheme.co.uk/

I have to say this scheme is the one of the few instances where the UK government should be applauded on tax and transportation policy. You can't say that very often lol!

Cyclescheme is an intermediary that do the paperwork for employers (mainly large organisations). Some organisations insist on using them and reducing the admin work required for the scheme. Cyclescheme as the processing intermediary then charge particpating bike shops 10% of the order price for relaying the business on to them Once an employees application is processed they are given a voucher to give to the bike dealer whcih they can then redeem for cash. Quite a lot but some bike shops seem to be willing to absorb the 10% commission fee from Cyclescheme, others add the 10% surcharge and then there are of course non-participants. My employer as a large University particpates in the Cycle to Work programme but insists that we use Cyclescheme which is fair enough, it's great they do it in the first place. I also find Cyclescheme very polite and helpful I must say, even if I take the view that their charge to bike shops should be a bit less than 10%, given the tight margins on top bike brands.

The core scheme is Cycle to Work which can be found at:
http://www.dft.gov.uk/pgr/sustainable/cycling/cycletoworkschemeimplementat5732

I will get tax relief on my 12 payroll instalments at my highest rate of marginal tax but because my University is non-VAT there is no relief there. Employees lucky enough to be working for a VAT registered organisation who particpate in the Cycle To Work scheme can save both the marginal rate of income tax and an additonal 17.5% on VAT. Participating employers also get some capital allowances during the lease peiod too. The scheme does make expensive but excellent folding bikes like Brompton and Birdy eminently affordable for many people!

Whether the participating employer chooses to process manual applications or uses an intermediary like cyclescheme.co.uk tends to vary. Be careful to check your employers own terms and conditions because they own the bike and you are effectively leasing it during the period of instalments. When the payment period is up the buyout clauses tend to vary. Some are typically 10% of the original purchase order,, others charge a very small nominal amount, if nothing at all. You need to take into account the buyback cost to calculate your true net savings when the instalments period is up. Few employers wish to retain ownership unless they are intent on running a bike pool which I would surmise, is very rare.

Some very important information on ownership issues on the scheme:


Can the employee keep the cycle at the end of the loan period?

There should be no automatic entitlement for the employee to take ownership of the cycle and cyclists' safety equipment at the end of the loan period. If the loan agreement (technically a hire agreement under the Consumer Credit Act 1974 (CCA)) allows for ownership of the cycle and cyclists' safety equipment to pass to the employee upon the exercise of an option, the doing of any other specified act by either party to the agreement, or the happening of any other specified event, the resulting agreement is likely to be hire purchase in which case the tax exemption available for a loaned cycle may not be available.
However, at the end of the loan period, the employer may choose to give the employee the option to purchase the equipment. Typically this would be offered at substantially less than the original value of the equipment, but to prevent a taxable benefit in kind arising as a result of the transfer of ownership the employee must pay the employer the fair market value of the equipment. No tax relief is available to the employee for the purchase so, where the price is recovered from salary, it must be deducted from their net salary. VAT will also be payable on the purchase price by the employee on the supply by the leasing company or the employer as owner of the equipment.
Alternatively, the employer may wish to allow their employees to continue to use the cycles and cyclists' safety equipment you have supplied after the initial loan period has ended, without transferring ownership. As long as the employee continues to meet the conditions of the tax exemption (see section 4 above) no tax charge will arise.
For fuller guidance on transfer of ownership, you may wish to refer to the HMRC website http://www.hmrc.gov.uk/news/comps-and-bikes.htm

Thanks jefmcq and mulleady,

I will read this properly once I have really woken up. (It's 5:20 AM right now)

David

yes the key thing to remember with any of these schemes is that your employer is purchasing the bike (asset) , and therefore technically owns it - you are merely renting the asset from your employer...

if you were buying the bike yourself, this would be hire purchase and the tax relief arrangments offered by the scheme would not apply.
are the owner as you are the one using it..

Si