Cycle to work - true ERs cost

as an employer what is now involved & cost

Didn't find your answer?

looking at this again [ last time 6 yrs ago - with a different client] & it all seems so different.....

how has this evolved and do company's now find a large admin burden - & is there good take up  & is it just 100% payroll and salary sacrifice for employee ?

is there any liaibilty back on th business if the employee leaves having got a £ 1500 bike + accessories!

Have a new ish cycle mad SME md who wants a scheme,  just spending time trawling web on an update - but appreciate any recent hands-on headsup/traps etc

[happy to take pm on this..]

many thanks

Replies (10)

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By Hugo Fair
16th Jul 2023 13:46

Ignore the blandishments of scheme providers (which litter Google results) ... instead try https://www.legislation.gov.uk/ukpga/2003/1/section/244

Although HMRC have been strangely silent with regard to guidance updates, there's also https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21664

Happy reading ... and, depending on number of employees in SME, also bear in mind the condition regarding usage of the cycle (mainly for getting to/from work).

Thanks (2)
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By Wanderer
16th Jul 2023 16:33

Quite a bit has changed in the provider's market but realistically the fundamentals are the same.

The employee leaving scenario is covered in the T's & C's of the schemes salary sacrifice agreements and is basically claw back any outstanding balance from employee's final pay.

Of all the schemes the most acceptable for the retailers is:-
https://www.greencommuteinitiative.uk/

Thanks (2)
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By tom123
17th Jul 2023 11:17

I don't believe the usage requirement applies anymore.. we don't enforce that here.

Plus, also, once the payment finishes we don't do anything more.

This is our pragmatic approach - I just wish stupid things like this would go away..

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Replying to tom123:
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By Hugo Fair
17th Jul 2023 11:27

I sympathise with pragmatism, but if you follow my two links in earlier post then you'll see:

a) the 'usage requirement' has not disappeared or been watered down in legislation;
b) HMRC's EIM guidance is more generous than usual in arriving at what may constitute 'main' usage (however the dispensation announced during the pandemic has now been revoked).

So tread carefully - although chances are good that no-one will check.

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Replying to Hugo Fair:
Ivor Windybottom
By Ivor Windybottom
17th Jul 2023 12:46

See EIM21664 mentioned above, which makes clear for usage:
"Employees are not expected to keep detailed records of time spent cycling or miles travelled for the purpose of this ‘main use’ test. Accept that the test is satisfied unless there is clear evidence to suggest that less than half of the use of the cycle or equipment is on qualifying journeys."

Without records and unless it was a fixed gear track bike or similar, it is difficult to see HMRC raising the point.

Hugo is correct that usage still applies. The employer can perhaps be protected by ensuring the scheme has a requirement for the employee to use it 50%+ for work.

Also watch out for the VAT position. While it is possible to reclaim the purchase VAT at the outset, it may be easier for the employer not to reclaim this VAT as it is repayable to HMRC as output tax on each and every salary sacrifice amount. The accounting for this makes it a pain.

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Replying to Ivor Windybottom:
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By WhichTyler
17th Jul 2023 14:10

Agreed about the pain. In my experience the scheme benefits a few existing keen cyclists who want a discount on fancy kit that they would have bought anyway (like your MD) and very very rarely encourages people to take up cycling

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Replying to Ivor Windybottom:
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By Hugo Fair
17th Jul 2023 17:00

"The employer can perhaps be protected by ensuring the scheme has a requirement for the employee to use it 50%+ for work" ... not sure how that 'requirement' is meant to be policed (or is that your point)?

As I said before HMRC apply an unusually generous interpretation - with the key being that usage relates to "qualifying journeys", which they are happy to base on the same conditions used for determining the benefit of a works bus service (so journeys between home and work are in this context considered 'qualifying').

Net result ... if commute is reasonable distance then everything's probably hunky-dory; but if commute is very local (and cycle not even used every day), then chances are those weekend uses will be tipping this into taxable territory (if uncovered).

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Replying to Hugo Fair:
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By tom123
18th Jul 2023 15:09

I'm gradually getting to the end of existing agreements - and we don't promote it at all..so hpoing it just withers away.

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By accountaholic
18th Jul 2023 13:56

Did HMRC not say openly a few years ago that they would not attempt to police this.

Reading between the lines I thought this meant they felt it was political tinkering with the tax system to make a green/healthy statement without thinking through the consequences. Return of OTS anyone?

Pragmatically I just set it up with the provider and make the admin as simple as possible. I haven't had to deal with a clawback yet, nor do I have a yard of second hand bikes that have been returned.

I agree with Tyler that it's most attractive to buyers of expensive bikes as you have to buy through approved suppliers. If you shop-till-you-drop on cheapcycles.com for a regular bike it may well be chepaer forgetting about the CTW scheme.

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