CYCLE TO WORK SCHEME MARCH 2015
YOUR QUESTIONS ANSWERED
The most common questions about the cycle to work scheme are listed here under
the following headings:
1. What is a cycle to work scheme
2. How does Cycle Scheme work?
3. Who can join the scheme?
4. How does it affect my salary, conditions of service, pension and state
benefits?
5. What can I order?
6. How do I order and get my bike?
7. What are my responsibilities during the hire period?
8. What happens at the end of the hire period and what happens if I leave
my job before the end?
9. What facilities are there for cyclists who travel to work by bike?
1. What is a cycle to work scheme?
The cycle to work scheme is a UK Government annual tax exemption initiative
introduced in the 1999 Finance Act to promote healthier journeys to work and to
reduce environmental pollution. It 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 and does not
require the prior approval of HMRC.
Who is involved in running the scheme?
An employer may choose to run their own cycle scheme as and when they see fit.
Fife Council has run 12 very successful cycle to work schemes and is running the
13th scheme from the 2nd March to the 30th March.
The 2015 scheme is managed by our provider Cyclescheme who has several
independent bike shops participating. Halfords is also participating See section 5 for
details of participating Fife based local independent shops.
2. How does the cycle scheme work?
Employees can lease a bike and safety equipment up to a value of £1,000 (incl. VAT)
for use in travelling to, from and during work. The lease cost is deducted from your
gross salary in equal instalments over an 18-month period.
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You save money as the reduction to your gross pay means that you do not pay
income tax and National Insurance on the amount by which your gross salary is
reduced.
When will I be able to order a bike?
After the success of our previous schemes, the scheme will be re-launched again on
2nd March and you will have till 30th March 2015 at 11.59PM to make your
application.
Who owns the bike and what happens to it at the end of the scheme?
Fife Council owns the bike for the duration of the lease. At the end of the 18-month
lease period, Cyclescheme will contact you regarding the transfer of ownership. See
section 7 for further details.
How much can I expect to save?
The potential saving is up to 42% off the retail cost of the equipment through tax and
National Insurance savings as you pay the lease costs from your gross salary, before
tax. The amount saved will be dependent upon your individual tax coding and tax
bracket. For example, a £200 bike package will cost a basic rate tax payer
approximately £137 after tax savings, spread over 18 months (i.e. approximately £7
net per four weeks). See section 7 for further details.
Is there a minimum/maximum financial limit on what I can lease?
There is a minimum limit of £100 and a maximum limit of £1,000 (both inclusive of
VAT) for bikes and safety equipment which should provide ample choice of a range
of bikes.
Do I have to use the leased bike to get to my work?
Employees must use the equipment mainly for qualifying journeys; i.e. at least 50%
of the journeys made on the bike must be between the employee’s home and
workplace, or part of those journeys (for example, to the station), or for journeys
between one workplace and another.
3. Who can join the scheme?
Can any employee join the scheme?
Any employee of Fife Council can apply to the scheme. Employees that are on, or
due to go on, unpaid leave or a Career Break may be declined entry to the scheme.
Employees who know that they will not be a Fife Council employee for the full 18month contract of the scheme should refer to section 7 to read the consequences of
not completing the full term of the contract.
I do not have a high income, will I be able to join the scheme?
Any employee of Fife Council can apply to the scheme. Employees whose income
would be reduced to less than the NI Lower Earnings Limit (currently £111 per week)
or the National Minimum Wage (£5.03ph - 18-20yrs/ £6.31 - 21yrs+) may be declined
entry to the scheme but will be given advice on how they can go about getting a bike.
If you have more than one permanent or long-term temporary job with the Council,
you can combine your salaries for the purposes of the scheme.
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Another member of my household also works for Fife Council, can we both
participate in the scheme?
Yes, each employee is treated separately.
Can I join the cycle scheme more than once within a cycle scheme lease
period?
The only restriction is for those employees who are currently still paying a lease. In
essence, all past leasing agreements must be satisfactorily terminated before a new
lease is undertaken.
I currently get Childcare vouchers under a salary sacrifice scheme can I join
more than one salary sacrifice scheme?
Yes, providing you meet the eligibility criteria and have sufficient salary to avoid
dropping below the National Minimum Wage (£5.03ph - 18-20yrs/ £6.31 - 21yrs+)
and National Insurance Lower Earnings Limit (currently £111p/w). Please refer to
the above regarding National Minimum Wage and eligibility.
3. How does it affect my salary, conditions of service, pension and state
benefits?
How does the scheme affect my salary?
By participating in the scheme you will be agreeing to a contractual change to your
salary for a period of 18 months. Your revised salary will be your original gross salary
less this and any other “salary sacrifice” reductions you may agree/have agreed.
When will I see the reduction in my salary?
Deductions from salary will be made on the first available pay date after the scheme
ends.
What happens if I get an increase in my salary during the agreement?
Your payments are based on your original gross salary and will not be affected by
any pay rise during the agreement.
Will my occupational pension rights be affected?
Both your personal pension contributions and contributions made by Fife Council are
based on your pre-salary sacrifice pay. Pension entitlement will be unaffected by
participating in this salary sacrifice scheme.
What is the effect on my terms and conditions payments such as overtime?
Participation in the scheme will not affect these types of payments as they are based
on your pre-salary sacrifice pay.
What if I take unpaid leave or the sick pay I receive does not cover the lease
payments from my salary?
Your payments will cease temporarily and the length of the lease will be extended
accordingly. There will be a limit of 6 months temporary suspension of payments.
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Will there be an effect on my state benefits?
State benefits, such as Statutory Maternity Pay, Statutory Sick Pay and tax credits,
are based on your actual earnings after salary sacrifice reductions. You should
therefore check how a reduction in gross salary may affect your benefits with the
benefits provider.
For further information consult the following link to the HM Revenues and Customs
FAQs http://www.hmrc.gov.uk/specialist/salary_sacrifice.pdf
Will any financial reference be affected (e.g. mortgage enquiry)?
If you require a financial reference confirming your salary, this will show both your
pre-salary sacrifice pay and your new contractual salary. Be aware that a lender may
base their decision on actual earnings (i.e. your reduced salary). You should discuss
this with your lender if you have any concerns.
Will a credit check be undertaken?
No. As you will sign an Employee Hire Agreement this enables the Council to deduct
payments from your salary for the 18-month lease period.
Will tax rate changes affect my savings?
Government tax rate changes will not affect the pre-salary sacrifice price of the bike.
However, as income tax and/or National Insurance rates might change in future, the
amount of your net salary might be affected.
4. What can I order?
What kinds of cycles are available in the scheme?
You can choose any bike from the extensive range provided by the participating bike
shops in Fife as long as 50% of the bike’s usage is for all or part of the journey to and
from work. Participating shops are listed later in this document.
Can I select more than one cycle?
Yes. As long as they are both necessary for travelling to work e.g. if cycling to a train
station, leaving it there, and then cycling from another train station to work and DO
NOT exceed the £1,000 limit.
Is safety and other associated equipment included in the scheme?
Yes. Any equipment that contributes to your safety on the bicycle is included. This
includes lights, helmets, reflective bands and high visibility clothing. Mudguards,
bags/panniers, child seats and safety locks are also included.
Will I be able to upgrade my cycle after collecting it from the shop?
Yes, you can change the pedals, wheels, gears etc. However, if by doing so, the
frame is damaged, it may no longer be covered by the warranty.
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5. How do I order and get my bike?
Which shops can I select a bicycle from?
You may select a bicycle and safety equipment from any independent bike retailers.
These are the ones available in Fife:
Sandy Wallace Cycles
15 Hope Street
Inverkeithing,
Fife
KY11 1LW
01383 412915
The Bike Shop Scotland
29 Malcolm Street
Dunfermline, Fife
KY11 4TS
01383 621999
Leslie Bike Shop
101 High Street
Leslie
Fife
KY6 3DQ
01592 741786
Spokes of Kirkcaldy
425-427 High Street
Kirkcaldy, Fife
KY1 2SG
01592 646203
Planet Velo
10 Canmore Street,
Dunfermline, Fife
KY12 7NT
01383 622660
The Fife Cycle Centre
2 Meadow Road,
Leuchars
St.Andrews, Fife
KY16 0EX
01334 838989
Hardie Bikes
86c Main Street
Cairneyhill, Fife
KY12 8QU
01383 889088
Leslie Bike Shop
Bankhead Industrial Estate
Blackwood Way
Glenrothes, Fife
KY7 6JF
01592 770600
Spokes of St Andrews
37 South Street
St Andrews, Fife
KY16 9QR
01334 477835
Or either of the Fife Halfords Stores.
Halfords Kirkcaldy
Unit 2 Fife Central Retail Park
Kirkcaldy, Fife
KY2 6QL
01592 642258
Halfords Dunfermline
Unit 6 Carnegie Drive Retail Park
Dunfermline, Fife
KY12 7AU
01383 620853
Can I pay more than the value I select?
No, you cannot pay more than the value of the Certificate issued as this would cause
a conflict of ownership of the equipment and would not meet the criteria for
exemption. If you wish to purchase additional equipment outside the value of your
selected bicycle package this must be made as a separate transaction and will not
form part of the Hire Agreement and therefore no tax/NI savings will accrue.
Can I elect to make higher deductions and shorten the term of the lease?
No, the lease period is fixed for 18 months.
As it's a non-tax benefit do I need to inform HM Revenues and Customs
(HMRC)?
No. The scheme is set up so that under the current tax rules you do not have to pay
tax on the benefit and therefore you do not have to notify the HMRC.
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Can the bike be delivered to my home address?
You should investigate this possibility with the bike shop. Delivery by the shop would
possibly attract a charge which would not be included within the salary sacrifice
scheme. You would have to arrange and pay for this yourself.
Pre-application
If you haven’t already done so, go to www.FifeDirect.org.uk/cycletowork and find out
about the scheme and the participating stores. You can go to one or more of the
listed shops in Fife and ask for advice. You should then obtain a quotation from the
store of your choice for both the cycle and equipment and decide whether you would
want to progress with your order.
You can check your savings at www.cyclescheme.co.uk/fife.
To place an order follow the five stage online process outlined below:
Stage 1 – Application
To make an order online via the internet log on to www.cyclescheme.co.uk/fife and
click on ‘request your certificate’. This will normally be delivered by email to the email
address you supplied.
You will need the first six digits of your Personnel Number, which can be found at
the top left-hand corner of your payslip. Without the correct number Fife Council will
be unable to verify your status as an employee and your order will not be progressed.
As part of the application process you will be asked sign an online Hire Agreement.
This covers the variation to your terms of employment and your authorisation to Fife
Council to deduct the payments from your gross salary for the 18-month period of the
lease. It is essential that you read through the details fully before signing the Hire
Agreement. Raise any queries on details that you do not understand.
The agreement will be countersigned by Fife Council once your application has been
approved.
If you do not have access to the internet at work or home, you could use the facilities
of your local library or internet café. You can also call the Cyclescheme helpline and
one of the operators will assist in making your application over the phone by calling
08448795101 between 9.00am and 5.30pm Monday to Friday (calls are charged at
local rate from a BT landline. Charges from other operators may vary).
Cancellation Rights
You have a right to cancel this agreement upon the later of 14 days from the date
you receive an email containing a link to the fully approved and executed agreement
under the Consumer Credit Act 1974, or within 7 working days beginning with the day
after you have collected/received the Equipment under the Consumer Protection
(Distance Selling) Regulations 2000. You may cancel this agreement within that
period by giving written notice to Fife Council. Return of any collected/received
Equipment will be at your own cost and risk. If you cancel this agreement and a
salary reduction has been applied under the agreement, Fife Council will include the
value of the sum of any salary reductions made in your gross salary at the next date
your salary is due to be paid.
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Step 2 – Approval
Once your application has been approved, an email will be sent to your registered
email address. Cyclescheme will then send you your Certificate. Note: it may take up
to 3 weeks between applying and receiving your Certificate.
Stage 3 - Redemption
You should then take the Certificate and valid proof of I.D. to your chosen bike shop
and exchange it for the bike and safety equipment of your choice.
.
All Certificate codes are traceable and the same Certificate cannot be used multiple
times.
Can I change the value of my application once I have submitted my order?
No. You cannot change the value of the order once it has been approved.
What happens if I don't use the full amount of the package value I selected on
my order (i.e. the amount specified on the Certificate)?
The salary reduction will be as specified on the Employee Hire Agreement, i.e. the
amount you selected on your order. Even if you do not fully utilise this amount, your
salary will be reduced by this amount. Therefore, you are strongly advised to fully
utilise the value you selected.
6. What are my responsibilities during the lease period?
When can I use the bike?
The only requirement placed upon you is that the bike must mainly be used for all or
part of your journey to work, i.e. at least 50% of the bike’s usage must be for your
journey to work. This can include cycling to a train or bus station. You can also freely
use the bike for business travel but for the duration of the lease (18 months) you will
not be eligible to claim the mileage rate payable for work cycle journeys because
technically the cycle belongs to Fife Council for as long as the lease is being paid.
Though once the lease is over you can claim the mileage rate for business journeys.
What happens if the bike is damaged or stolen?
You are responsible for the bike/equipment during the period of the lease. It is a
requirement of the scheme that you insure it adequately against theft and other usual
risks. It might be possible to arrange this under a household insurance. Alternatively,
the bike shop might be able to advise you on this matter. Please note that you will
still be liable for the lease payments even if your bike is stolen or written off.
Therefore, the insurance should cover the full cost of repairing or replacing the
equipment. Cyclescheme participants receives a 10% discount off cycle-specific
insurance through Cycleguard: www.cycleguard.co.uk/cs
Who is responsible for repairs and maintenance?
During the hire period you will be responsible for any necessary repairs and
maintenance. The bicycle may come with a manufacturer's warranty covering the
frame and other parts. You should check the warranty details with the bike shop and
enquire about any free servicing that may be offered.
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7. What happens at the end of the lease or what happens if I leave my
employment before the end?
What happens at the end of the lease period?
At the end of the lease period Cyclescheme will contact you to discuss your end of
hire options. In order to preserve the tax benefit of the scheme no guarantee can be
made regarding an offer of ownership. However, the most attractive option currently
offered to participants by Cyclescheme is to pay either 3% (if your bike package was
under £500) or 7% (if your bike package was over £500) of the original cost to enter
into a 2½ year extended agreement with Cyclescheme. During the extended
agreement you will not be expected to make any further payment and you may
change employers during the agreement or use the scheme again if you wish. At the
end of the extended agreement Cyclescheme may choose to offer ownership of the
bike to you at no further cost.
What happens if I leave Fife Council before the end of the lease period?
If you leave your post with Fife Council for whatever reason, you become an “Early
Leaver” under the terms of the scheme. You will have to pay ALL the outstanding
payments remaining on your Agreement (“the termination fee”) from your final net
salary. The deduction is taken from net rather than gross salary, as you will no longer
be entitled to benefit from Income Tax and NI savings. Please be aware you may be
left with a zero net salary after deductions are taken. If there is not enough net salary
to recover from your final salary an invoice will be issued. You will be required to
pay the balance owing to Fife Council within 14 days of your departure from Fife
Council. Cyclescheme will contact you regarding transfer of ownership as usual.
If you think your employment is likely to end before the 18-month period of the hire,
you should consider very carefully whether you wish to participate in the scheme.
What happens if I want to terminate the agreement early?
You cannot leave the scheme prior to the end of the lease period unless you leave
Fife Council (see above note on early leavers). The agreement and the reduction in
your pay will continue to the end of the period even if your personal financial
circumstances change.
Can I sell the equipment obtained under the salary sacrifice scheme?
No. For the period of the lease, the equipment is not yours to dispose of or sell.
8. What facilities are available for cyclists who travel to work by bike?
Does the Council provide storage for bicycles at the workplace?
Some premises do have bike shelters. However, where there are currently none
provided and there is a demand, the Council may be able to help provide such
facilities, through the Travel Plan. For more information e-mail:
Travel.Plan@fife.gov.uk
Are there changing/shower facilities?
Some premises have these facilities already. Where they are not provided and there
is a demand, it may be possible to provide them depending on the ownership or
lease period of the building. Again, contact: Travel.Plan@fife.gov.uk to discuss this
and their provision will be investigated
Will additional commuting time be in my own or Council time?
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As it is commuting to and from work it will be in your own time.
Will additional time be given to me for showering following my commute by
bike?
No. Through the Travel Plan this was investigated and found to be unworkable.
Is there a mileage allowance for using my bike during work?
Normally there is a mileage allowance of 20 pence per mile (tax free) for work
journeys undertaken by bike (note; journeys between home and work are not
business travel for this purpose). Employees cannot claim mileage allowance for
business travel if they use a cycle leased to them by their employer or a pool bike.
Any employee considering joining the cycle to work scheme will need to consider
whether they would prefer to use another cycle and be able to claim the 20p per mile
tax free for any business miles they travel, as opposed to having a cycle leased to
them by their employer. Obviously, once the lease period is up the ability to claim this
20p per mile for work journeys would resume if the employee has chosen to take
ownership of the bike.
Can I recycle my old bicycle?
Yes, to find out more phone Bike Works on (01592) 751500 (number correct at time
of writing) or visit www.fifebikeworks.org.uk
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