Cycling has received a huge boost since the Coronavirus crisis, with more people cycling to avoid public transport and get back to work. Halfords has reported that sales of some cycling equipment had risen by 500% since the lockdown, and bike sales have doubled this month[i].
Cycle-to-work schemes giving tax benefits to employees to buy a new bike from official stores have also reported a doubling in sales – a figure expected to rise even further as employees realise they can buy a new bike without an upfront payment[ii].
Howden Employee Benefits & Wellbeing has also seen growing demand from clients keen to set up cycle-to-work schemes, following the government announcement to ease lockdown restrictions on Sunday 10th May.
Cheryl Brennan, Director of Corporate Consulting at Howden Employee Benefits & Wellbeing says “Since the Prime Minister’s announcement, we have seen a surge in employers wanting to set up cycle-to-work schemes. Such schemes can have a really positive impact on employees’ overall health and wellbeing, they are a tax-efficient employee benefit and cycling offers obvious environmental benefits.”
“We anticipate more firms will offer such schemes as part of their overall health and wellbeing programmes in the coming months. However, they need to set up the scheme properly and ensure they communicate the benefit clearly to employees.”
Cycle-to-work operates as a ‘salary sacrifice’ employee benefit[iii]. The salary sacrifice is taken from the employee’s gross salary (before tax), which means they will pay less Income Tax and National insurance.
Employer savings relate to National Insurance Contribution rates[iv]. Generally, employers contribute 13.8% to employee NICs and can, therefore, generate up to 13.8% savings on any funds processed via salary sacrifice.
Howden Employee Benefits & Wellbeing offers the following tips for employers looking to set up a cycle-to-work scheme:
- Be clear about the scheme and the HMRC considerations. This includes ensuring employees understand this is essentially a loan and are clear about the tax implications
- Good communication is crucial. Make sure employees are aware when they join the scheme, they may not receive their bike immediately and their expectations need to be managed.
- Bike storage and shower/wash facilities should be provided.
- Ensure employees understand the crime rates in the area and that they are responsible for the safekeeping of the bike and will be liable to continue paying the rental agreement if the bike is stolen.
Cheryl Brennan adds, “A cycle to-work scheme is open to employers of all sizes across the public, private and voluntary sector. Organisations can set up and run their own salary sacrifice scheme or choose a cycle-to-work scheme provider.
“We can offer tailored advice to employers on the best approach and how to implement a scheme quickly and efficiently. We specialise in intelligent employee benefits and help employers find and provide benefits that people really value because they genuinely improve their lives.
“Cycle-to-work schemes appeal to employees and employers and encourage people to be healthier and fitter. As the country eases out of lockdown, they are a great way to help employees avoid public transport and travel into work more safely.”
For more information, please visit www.howdengroup.co.uk