Bike to Work - Common Questions Answered

The Bike to Work Scheme is a Government green transport initiative that allows your employer to offer employees the option of hiring bicycles and cycle equipment over a set period without having to pay Tax or National Insurance on the payments.

If you choose to participate in the scheme, your employer will provide you with a bicycle or cycle equipment on loan in return for you agreeing to receive a reduced level of pay for the Period. Your employer agrees to provide you with the free use of the bicycle for that period. This is a tax free benefit and this nominated amount will not be subject to Tax or National Insurance deductions.

A Salary sacrifice is a legally binding change in the contractual arrangements between employee and employer. Generally, the employment contract is amended to reduce the employee's entitlement to cash pay on the basis that the employee receives an alternate non-cash benefit instead.

At the end of the hire period, your employer may seek to dispose of the bicycle equipment at a full market value. But please note that this cannot be guaranteed until the end of the hire period. It is common in such circumstances to offer to sell the equipment to the person who has had the equipment on hire. However, you should be aware that such practice and expectations are merely indications based on historical factors and cannot be guaranteed for the future. Any subsequent sale would also be pursuant to a separate agreement, entered into after the conclusion of the hire.

HMRC have recently issued new guide lines about handling full market value. These guidelines provide clarification and a valuation matrix which employers may use to value the bicycle. Please follow this link for more details. For more information please contact your employer as they do have options regarding the Full Market Value payment at the end of the scheme. For example, as detailed elsewhere in these
pages, they may just allow you to continue to use the bicycle without transferring the ownership over to you.

In order to benefit from the Tax and National Insurance savings the bicycle must be used for a minimum of 50% of the time for journeys to and from work or between work sites.

• Employees who have contracts of employment that outlast the duration of the salary sacrifice period.
• Employees must be 18 years or over in England and Wales, 16 years or over in Scotland.
• Employees must pay tax via the PAYE system.
• Employees must not drop below the minimum wage once the loan repayment has been deducted.
• You may wish to contact your HR department to confirm your eligibility to join the scheme.

If your employer operates an Bike to Work Large Employer Account with Edinburgh Bicycle
Co-op, please contact your HR office or refer to your staff intranet site to confirm the start and
finish date of your employer's scheme.
Please note that if you work for a large organisation with a close date, the Hire Agreement must
be completed and signed in the branch of Edinburgh Bicycle by the final date of the scheme, but
that you will be able to collect your bicycle and related safety equipment after the close date.
If your employer operates a Bike to Work Small Employer Account with Edinburgh Bicycle Co-op,
the Bike to Work Scheme is usually permanently available.
Back to top

A salary sacrifice occurs when an employee agrees to a reduction in pay in return for the employer providing a non cash benefit. The reduction comes out of the employee's gross, rather than net pay. This causes a reduction in income tax and National Insurance payments. Which is where the savings are made.

Edinburgh Bicycle Co-op shops are open seven days a week from 10am until 6pm, with late opening every Thursday until 7pm. The Edinburgh, Manchester and Mail Order Branch of Edinburgh Bicycle operate summer opening hours (1 April - 30 September) and are open Monday to Friday from 10am until 7pm five days a week during this period. They are open until 6pm on Saturday and Sundays. 

The bicycle must be suitable for travelling to and from work. For this reason children's bicycles are not available to hire under the scheme. All other types of bikes are suitable to choose under the scheme including electric bikes. Edinburgh Bicycle Co-op stores have up to 250 bikes on
display at any one time with the opportunity to request many more from their warehouse or available to order in.

Yes, you can. Please note though that both bicycles must be for yourself and that the total value of both the bikes combined must be under the £1,000 limit. Please note that employees from the City of Edinburgh Council can only hire one bicycle on the scheme.

The bike must be suitable for journeys to and from work. As well as the bicycle, the salary sacrifice scheme also covers cyclists' safety equipment, including:

• Helmets
• Bells and horns
• Lights
• Reflective clothing including jackets, gloves and over trousers
• Mirrors and mudguards to ensure riders visibility is not impaired
• Child Seats
• Trouser bands/clips
• Panniers, luggage carriers and straps to allow luggage to be safely carried
• Locks and chains to ensure cycles can be safely secured
• Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs.

This is not a comprehensive list of the safety equipment you can choose.

Yes, if you do not require a bicycle you are able to hire just safety equipment on the scheme.

No, if you only require a bicycle and currently have all the related safety equipment you need, it is not a requirement that you must choose safety equipment.

As the bicycle equipment will belong to your employer you must, make sure that the bicycle equipment is insured. The easiest way to do this is to get it added to your household contents insurance, if it is not already covered. Replacement equipment is not available under the scheme. If the bicycle equipment goes missing or is damaged, you will still have to pay the monthly amount for the remaining months of the Hire. Keep the bicycle equipment clean and in good order. Insure the bicycle (it's worth checking your home contents insurance policy as bicycles might be covered).

The following rules apply so that you don't pay tax on this benefit:

• The bicycle equipment is used primarily by you to commute to work.
• The bicycle equipment remains the property of your employer.

With most Bike to Work Schemes you will have a maximum hire of £1,000, although this may vary depending on your employer. Please contact your HR department or refer to your staff intranet site for more specific information.

You cannot spend more than the maximum value of Hire by paying additional money to Edinburgh Bicycle. If you do require additional items that will take you over the maximum value of Hire, the staff at Edinburgh Bicycle will be able to help you purchase these on a separate transaction that is separate from your salary sacrifice arrangement. The view of the HMRC (Inland Revenue) is that if an employee was to contribute towards the value of a bike or equipment, this would be deemed shared ownership and the hire would not be covered by the tax exemption.

Please note that this step-by-step guide is for employees of large organisations with a Bike To Work Large Employer Account with  Edinburgh Bicycle Co-op. If you are unsure whether you work for a company that uses this process, please contact your HR department or refer to your staff intranet site for more specific information.

1. Read through this information and familiarise yourself with the terms and conditions.
2. Visit your local Edinburgh Bicycle Co-operative store to decide on the bicycle and safety equipment you want. Remember to take along your staff photographic ID card and two recent payslips as proof of employment with your employer along with you.
3. Complete the Hire Agreement in store with the help of the Edinburgh Bicycle Co-op staff. Edinburgh Bicycle will post the original Hire Agreement to your employer on your behalf for processing. You will be given a copy of the Hire Agreement for your own records.
4. Once you have received your voucher in the post (you will also receive a second copy of the Hire Agreement counter signed by your employer for your records), return to Edinburgh Bicycle to collect your bicycle and safety equipment on the agreed date. Remember to take your voucher and staff photographic ID with you. You will not be able to collect your bicycle and safety equipment without these.
   
   

Please note that this step by step guide is for employees of small organisations with a Bike To Work Scheme Small Employer Account with Edinburgh Bicycle Co-op. If you are unsure whether you work for a company which uses this process, please contact your HR department.

1. Read through this information and familiarise yourself with the terms and conditions.
2. Visit your local Edinburgh Bicycle Co-operative store to select the bicycle plus any safety equipment you wish to add to the order under the salary sacrifice scheme.
3. Edinburgh Bicycle will give you two A4 sheets: a Pro Forma and a BACS information sheet. You must take both of these to your Payroll or Finance Department, who will ask you to complete the Hire Agreement.
4. Once the BACS payment has been received from your employer, Edinburgh Bicycle will contact you to confirm that the bike is ready for collection. (Please note that your employer must make the BACS payment, Edinburgh Bicycle must have received the payment AND contact you by telephone to confirm your bike is ready, prior to you returning to the store to collect.)
5. Collect your bicycle and safety equipment on the agreed date. Remember to bring photographic ID with you. You will not be able to collect your bicycle and safety equipment without photographic ID.
6. When collecting your bike, Edinburgh Bicycle will print a Cash Sale Receipt confirming that the goods have been paid in full, please return this to your payroll/HR department for their records.

Once the Hire Agreement is received and authorised by the employer you are committing to the full repayment period. The Hire Agreement is regulated under the Consumer Credit Act and is not cancellable. The only exception is where your employment ends before the bicycle equipment has been collected and you have contacted the Edinburgh Bicycle helpline (0845 257 0808) to inform them about this.

• It is your responsibility to insure the bike against damage and theft. If the bike is damaged or stolen the hire agreement is not cancellable and you will still be required to pay for the bicycle and safety equipment hired. If damaged, you will also be required to pay for repairs.
• Bikes can be covered by your household contents insurance and treated like any other possession. Check your insurance policy and make sure it covers the bike nationwide and that it pays for a replacement in case of a "total loss".
• Insurance companies such as Endsleigh or Cyclecover (Butterworth) cover you in case of loss of or damage to cycle and accessories in a crash, theft of cycle and accessories (but not theft of accessories alone) and malicious damage.
• CTC members benefit from third party liability, legal aid and personal accident cover.

Although you will have full use of the bike for the period of the hire, in order to obtain the tax advantages it is a requirement that ownership of the bicycle remains with your employer. 

• You will have to repay the outstanding amount that is left to pay from your final payslip. However, this amount will not be tax-free as it will be taken from your net salary.
• So, for example, if you leave a year into the hire agreement for a £300 bicycle, and you have paid £200 so far, you will have to pay the remaining £100 outstanding on the bicycle. You will not be entitled to receive the Tax and National Insurance savings on this outstanding £100. However, you will still have benefited from saving the Tax and National Insurance contributions on the first £200.
• If your final salary does not cover the outstanding amount, you will be sent an invoice for the remainder of the balance.
• Ownership of the bicycle remains with your employer who may then seek to dispose of it for a full market value. Please think very carefully before joining the scheme. If you think you may leave employment with your employer before the period of hire is over, it is not recommended you join.18. What happens if the bike or equipment is damaged, lost or stolen?
• It is your responsibility to insure the bike against damage and theft. If the bike is damaged or stolen the hire agreement is not cancellable and you will still be required to pay for the bicycle and safety equipment hired. If damaged, you will also be required to
  pay for repairs.
• Bikes can be covered by your household contents insurance and treated like any other possession. Check your insurance policy and make sure it covers the bike nationwide and that it pays for a replacement in case of a "total loss".
• Insurance companies such as Endsleigh or Cyclecover (Butterworth) cover you in case of loss of or damage to cycle and accessories in a crash, theft of cycle and accessories (but not theft of accessories alone) and malicious damage.
• CTC members benefit from third party liability, legal aid and personal accident cover.

• You will have to repay the outstanding amount that is left to pay from your final payslip. However, this amount will not be tax-free as it will be taken from your net salary.
• So, for example, if you leave a year into the hire agreement for a £300 bicycle, and you have paid £200 so far, you will have to pay the remaining £100 outstanding on the bicycle. You will not be entitled to receive the Tax and National Insurance savings on this outstanding £100. However, you will still have benefited from saving the Tax and National Insurance contributions on the first £200.
• If your final salary does not cover the outstanding amount, you will be sent an invoice for the remainder of the balance.
• Ownership of the bicycle remains with your employer who may then seek to dispose of it for a full market value. Please think very carefully before joining the scheme. If you think you may leave employment with your employer before the period of hire is over, it is not recommended you join.

• You will have to repay the outstanding amount that is left to pay from your final payslip. However, this amount will not be tax-free as it will be taken from your net salary.
• So, for example, if you leave a year into the hire agreement for a £300 bicycle, and you have paid £200 so far, you will have to pay the remaining £100 outstanding on the bicycle. You will not be entitled to receive the Tax and National Insurance savings on
  this outstanding £100. However, you will still have benefited from saving the Tax and National Insurance contributions on the first £200.
• If your final salary does not cover the outstanding amount, you will be sent an invoice for the remainder of the balance.
• Ownership of the bicycle remains with your employer who may then seek to dispose of it for a full market value. Please think very carefully before joining the scheme. If you think you may leave employment with your employer before the period of hire is over, it is not recommended you join.18. What happens if the bike or equipment is damaged, lost or stolen?
• It is your responsibility to insure the bike against damage and theft. If the bike is damaged or stolen the hire agreement is not  cancellable and you will still be required to pay for the bicycle and safety equipment hired. If damaged, you will also be required to
  pay for repairs.
• Bikes can be covered by your household contents insurance and treated like any other possession. Check your insurance policy and make sure it covers the bike nationwide and that it pays for a replacement in case of a "total loss".
• Insurance companies such as Endsleigh or Cyclecover (Butterworth) cover you in case of loss of or damage to cycle and accessories in a crash, theft of cycle and accessories (but not theft of accessories alone) and malicious damage.
• CTC members benefit from third party liability, legal aid and personal accident cover.

• After six weeks, you will be invited to bring your bicycle for a free six week service to the Edinburgh Bicycle store.
• Edinburgh Bicycle offer a comprehensive repair service for bicycles and also offer maintenance courses if you would prefer to do your own servicing.
• What happens if my bicycle has a warranty problem during the hire agreement period?
• When you choose your bicycle equipment, Edinburgh Bicycle Cooperative will advise you of the warranty period, as they vary with each bicycle.
• If you experience problems within the duration of the warranty period, take your bicycle back to the Edinburgh Bicycle Cooperative who will liaise with the supplier on your behalf.

After the period of hire in which your salary was deducted, your employer may seek to dispose of the bicycle/equipment for a full market value. Please note that your employer cannot guarantee it will sell the bicycle/equipment to the person who has hired them but historically this is often the case. Any subsequent sale would also be pursuant to a separate agreement, entered into after the conclusion of the hire.
HMRC have recently issued new guide lines about handling full market value. These guidelines provide clarification and a valuation matrix which employers may use to value the bicycle. Please follow this link for more details.

For more information please contact your employer as they do have options regarding the Full Market Value payment at the end of the scheme. For example, as detailed elsewhere in these pages, they may just allow you to continue to use the bicycle without transferring the ownership over to you.

Yes, there may be an impact on your entitlement to benefit payments such as Statutory Maternity or Paternity Pay, Statutory Sick Pay and Working Tax Credit, as they will be calculated on your reduced pay. There may also be an impact on your state pension. We advise you to
seriously consider the effect that a reduction in pay may have before you decide to join the scheme.

No. The Inland Revenue do not expect you to keep a mileage record of your usage of the bike