"The undue bureaucracy hampering this excellent idea appears to have been overcome, so the more people who hear about it the better," says Yannick Read of the CTC, the national cyclists organisation.
The basic principle of Cycle2Work is simple. Your employer is allowed to provide you with a bike to travel to work as a tax-free benefit – you can use the bike as often as you want for leisure riding, as long as you also use it to commute.
In practice, you choose the bike you want. Your employer then buys it and leases it to you over a set period, which is typically from one to three years. At the end of this term, you can buy the bike to keep for a nominal payment, usually between 2.5 and 5 per cent of the original purchase price.
You make big savings because each monthly payment comes out of your salary before tax and National Insurance have been deducted. You can even add the cost of a lock, a helmet, reflective clothes and bike lights to the deal.
So, for example, you choose a bike costing pounds 400, plus gear worth pounds 100. Your employer coughs up the cash, and is entitled to reclaim the VAT on the purchases, reducing the cost to pounds 425.
Lease the bike for a year, say, and you will pay about pounds 35.50 a month. For a basic-rate taxpayer, making the payment out of pre-tax wages reduces the cost each month to pounds 24, or pounds 288 over the year. At the end of the year, you buy the bike and safety gear at 2.5 per cent of its original price – pounds 12.50. In total, you get pounds 500 worth of bike and kit for just pounds 300.
The easiest way for your employer to implement Cycle2Work is through one of three providers that currently run the scheme on behalf of companies. Hal-fords has been involved with the scheme since the launch, but has recently been joined by Booost and Cycle scheme, which both have links to independent bike shops.
Laura Mason of Hal fords says the simplified scheme rules will make Cycle2Work even more attractive. "We have in excess of 300 employers running the scheme this year," she adds. They include companies such as the Royal Mail, Lloyds TSB and Microsoft, as well as several local authorities.
Using a Cycle2Work provider should ensure employers can introduce the scheme without burdening payroll departments.
Hal fords, www.halfordsb2b.com’ Cycle scheme, www.cyclescheme.co.uk’ Booost, www.booost.uk.com
HE COST OF A BIKE FOR WORK
Copyright 2006 Independent Newspapers UK Limited