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Cycle to Work scheme

Cycle to work deduction

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Hi

If you have an employee setup for the cycle to work scheme but whom doesn't use the bike for more than 50% of commuting would the monthly repayments still be a tax benefit, (i.e reducing PAYE, NIC)?

An employee is setup on payroll for monthly deductions which do not attract tax relief so just come off net. Was looking into querying as it should be deducted gross but maybe if the above is the guess then deducting net would be the correct process?

Thanks

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By The Dullard
14th Apr 2021 09:39

1) You post anonymously.
2) You don't give any information that might actually help.
3) In such circumstances, your guess is as good as anybody else's. So why not go with your guess?

Here's another guess. If the "deduction" was taken from gross pay as a salary sacrifice, would the individual fall below NMW?

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By GRIFFLG
14th Apr 2021 09:53

I did not mean to post anonymously but don't see what that has to do with the question in hand.

No they would not fall below NMW.

The question which is stated above is if you don't use the bike for commuting to work then would it not be correct to leave as is and for the repayments for not attract relief rather than looking to correct.
I don't see what additional information is needed to clarify further.

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Replying to GRIFFLG:
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By The Dullard
14th Apr 2021 10:23

I doubt very much that this is the reason, and it's clear from the OP that you were just speculating as to the reason. Typically nobody knows nor cares how the bike is used.

Is it wrong though? Who knows. There might be any number of reasons for it not being dealt with by salary sacrifice. The answer to your question inevitably lies internally in your organisation. Nobody here's going to be able to tell you why it is how it is.

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By paul.benny
14th Apr 2021 10:15

The full employer guidance is here:
https://www.gov.uk/government/publications/cycle-to-work-scheme-implemen... .

This also contains links to the relevant EIM pages. Although the requirement is that the bike is used 'mainly' for qualifying journeys, there is no obligation on an employee to keep detailed records nor on the employer to seek evidence of use.

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By Duggimon
14th Apr 2021 10:19

As you say, if you don't cycle to work you don't qualify for the cycle to work scheme, but as there may be other reasons for the amounts to be applied the way they are I would probably just ask them why they're deducting from net instead of gross instead of trying to work it out on my own.

Also don't post anonymously for no reason, and don't lie about not meaning to, it's not the default and it's prohibited by the rules where inappropriate - said rule being written right next to where you specifically selected to post anonymously.

People sometimes like to tailor their answers based on post histories and posting anonymously removes that ability and generally comes across as rude if the query doesn't need to be anonymous.

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By GRIFFLG
14th Apr 2021 10:34

Thanks for the posts.

I have asked and no one knows as to why they were deducted net, as far as aware they should have been gross, how it is corrected I guess is a case of discussing with HMRC.

I apologise for the original anonymous posting, regardless it wasn't my intention but consider myself duly told off!

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By Hugo Fair
14th Apr 2021 12:06

Despite sharing others' incredulity that you posted anonymously, your next steps (as opposed to 'the answer') are really simple:

1. The default for any such deduction is that it is made from net pay UNLESS there is a specific reason to treat it differently ... in this case the possible existence of a Cycle-to-Work scheme.
So is this employee signed-up to such a scheme operated by your company?
If No, then deducting from Net is correct (end of story).

2. If Yes, you need to consider whether the terms of the scheme are being adequately complied with in order for the deduction to be taken from Gross.
As others have commented, you don't need to audit the journeys but are expected to have an idea as to how the employee gets to work (not every day by the way).

Precisely because the WFH trend kyboshed the need for getting to work at all for many employees, HMRC agreed a time-specific easement - see https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21664
"Provided employees have joined a scheme, with a cycle or cyclists’ safety equipment provided to them on or before 20 December 2020, the qualifying journeys condition will not be applied until after 5 April 2022.
Employees who have a cycle or cyclists’ safety equipment provided after 20 December 2020 will need to meet all the conditions for the exemption to apply."

Perhaps you can now see why there's no simple answer to your question. Not only have you not provided (almost any of the) necessary details, but any answer may well lead to further questions.

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