The aim of the cycle-to-work scheme is very simple, to cut carbon emissions, cut commuter costs and promote healthier lifestyles to employees. A business can save up to £138 on every employee that signs up for the scheme and employees can save up to £420 on the cost of a brand-new bike and accessories.
The cycle-to-work scheme requires a salary sacrifice arrangement, whereby employees agree to a reduction from their gross salary to cover the cost of the benefit - whilst you enjoy saving on tax exemption and National insurance.
The employees each choose their bike and accessories, though are technically hired to them by the employer over a fixed term hire that is usually 12-18 months. Once the period of hire has ended, there is an option for the employee to purchase the bike and accessories for fair market value or return it to the employer.
The Cycle to Work benefit is offered in conjunction with Halfords and is part of the Government’s Cycle to Work initiative, which supports the Co-operative movement’s commitment to promoting healthy living and reducing carbon emissions.
Cycle-to-work saves money for Employers, and Employees. The employer can save on their National Insurance contributions of 13.8%. For an employee, at least 30% can be saved than through any other method of payment, due to tax and national insurance savings. For instance, a 20% income tax employee who used the full £1000 budget, would be required to pay only £680 through salary sacrifice at £57.67 a month for 12 months. This saving increases for higher income tax employees.
The £1000 maximum limit has now been removed in instances where a third party with pre-existing FCA authorisation (such as Halfords Cycle2Work) hires the goods directly to the employee, even though the cost is still recovered by the employer through salary sacrifice deductions. This £1,000 maximum will also not apply if the employer is authorised by the FCA for another separate regulated activity.
Co-operative Flexible Benefits provide a fully administered scheme allowing you to manage your scheme in seven easy steps. And what’s more, scheme delivery is cost-free for employers.
The Co-operative Flexible benefit Cycle to Work scheme is offered in conjunction with Halfords, which meets all relevant tax guidance (including recent HMRC guidance) and legislative criteria – important to know when introducing a scheme with tax implications.
Our scheme offers employers an opportunity to help staff limit their costs of commuting, promoting a healthy lifestyle, as well as cutting their carbon footprint with each cycle to work. Further aiding your business adhere to CSR and sustainability targets by becoming more sustainable and lower carbon-emitting.
Your local Account Manager will also provide ongoing scheme support, free marketing materials and all the scheme documentation that’s required. We can arrange on-site roadshows to help increase employee awareness, so you don't have to. To find out more about the scheme, please see our Employer FAQs.
You can of course take the next step in cutting carbon emissions and business costs, with the EV Cars and Travel scheme.
Savings explained* | |||
| Retail value of bike and accessories | £100 | £500 | £1000 |
| Gross monthly reduction** | £8.33 | £41.67 | £83.33 |
| Tax Savings** | £1.67 | £8.33 | £16.67 |
| National Insurance Savings** | £0.83 | £4.17 | £8.33 |
| Net cost per month | £5.83 | £29.17 | £58.33 |
| Total cost over 12 Months | £69.96 | £350.04 | £699.96 |
Total savings made | £30.00 | £150.00 | £300.00 |
* Price includes all costs in running the scheme over a 12-month period. Costs included can be used as a guide only and may vary subject to personal taxation.
**Assumes 20% Tax Rate and assumes 10% Employee NIC Rate.
To register, please contact our helpdesk team on 0800 458 7929 to discuss your requirements and start saving money and cutting carbon emissions for your business.
We’ll then set up your bespoke scheme based on your needs. Our approach means that we see each business and its staff as unique, so the details of your scheme are tailored individually.
Once you have registered, you can then take the next step in managing your cycle-to-work scheme. Please visit Managing your scheme to learn more about our 7 easy steps.
For any queries you may have, please check our Employer FAQs.
Seven easy steps - our online system makes the whole process really simple for you to administer from start to finish. Save money and cut your carbon emissions.
1. Employer Registration
Contact our helpdesk team on 0800 458 7929 to discuss your requirements. We’ll then set up your bespoke scheme based on your business's needs.
2. Promotion
We’ll help you spread the word, delivering free marketing campaigning that suits your business so you don't have to. Co-operative Flexible Benefits recommend that Employers organise schemes on a periodic basis (for example once or twice a year) with schemes lasting for 3-4 weeks, to ensure your Cycle to Work scheme has a positive impact with your employees.
3. Product Selection
Employees can sign up to the scheme online and choose the bike and safety accessories they would like. If they ever need to, employees can visit one of Halfords' nationwide stores for some help or guidance with their bikes or accessories.
4. Application
Employees use The Co-operative Flexible Benefits secure website to select a Letter of Collection (LoC) for their chosen amount to cover the value of the bike and safety accessories they require. They will then complete a Hire Agreement, which is passed to your Human Resources team for approval.
5. Collection
Employee Letters of Collection are issued within a week of the closure of the scheme. Employees may redeem their LoC at their local Halfords, Treds or at 1100 independent stores for their chosen bike and accessories. 97% of the population lives within 30 minutes of a Halfords store (440+ stores nationwide open every day of the year except Christmas Day). Every bike is collected in ready-to-ride condition: assembled, safety checked and fitted to the user by Cytech trained Halfords staff – the nationally recognised cycle industry accreditation.
6. Reconciliation
Employee Letters of Collection are issued within a week of the closure of the scheme.
Co-operative Flexible Benefits will invoice the organisation at the same time as Letters of Collection are issued to employees so they do not experience a delay in collecting their bikes. Our system delivers the information that payroll teams require to make salary sacrifice deductions.
7. Transfer of Ownership
At the end of the Hire Term, employers may choose to transfer ownership of the equipment to the employee, and your local Co-operative Flexible Benefits account manager will support this process.
Those 7 simple steps will get your cycle-to-work scheme up and running smoothly and safely, so money can be saved and carbon emissions can be cut.
No, anyone in an organisation can promote and manage the process. An authorised representative must sign Halfords' Supplier Agreement, and sign the leasing document should there be one in place.
During the scheme, an authorised representative must sign the employee Hire Agreement so that it can be executed. (Please ensure that you engage HR and Finance in the initial set-up and discussion.)
The legislation that governs a cycle-to-work scheme states that the Employer must own the equipment. There can be no automatic right for the Employee to own the equipment at the end of the Agreement. If they do, they cannot claim the tax exemption.
The cycle-to-work scheme operates as a loan: the Employer is technically loaning the equipment to the Employee for a fixed period. Although Employees do not actually own the equipment, they remain custodians of the equipment and are free to use it as they wish, despite it being mainly for cycling to work.
On the 28th of July 2011, HM Revenues and Customs announced important changes to how VAT is incorporated into the Cycle to Work Scheme. This follows the judgement of the European Court in the case of Astra Zeneca.HMRC have confirmed that from the 1st of January 2012, the salary sacrifice scheme for Cycle to Work will be subject to VAT. Employers will therefore charge VAT to employees who are on the Cycle to Work scheme with effect from the 1st of January 2012.
Since HMRC’s announcement in July 2011, our partner Halfords explored the implications of the ruling. After extensive research carried out by their Group Tax Manager, Halfords identified the potential to allow “grandfathering” to apply to existing cycle2work schemes. Halfords championed this approach with HMRC through the Cycle to Work Alliance as a fair and practical approach to implementing the ruling.
We are very pleased to advise that in response to the case developed and presented by Halfords, HMRC has issued further guidance as detailed below:
Salary sacrifice agreements signed before 28 July 2011 which extend beyond 31 December 2011. For salary sacrifice agreements that were in place, that is agreements that were signed before Revenue and Customs Brief 28/11 announcing the change was published (i.e. 28 July 2011) and which extend beyond 31 December 2011.
HMRC will allow amounts of salary foregone in return for taxable benefits to continue to be free of VAT until the dates any fixed-term agreement expires or a fixed number of salary sacrifice payments specified within the agreement are completed. (If the agreement expires before 1 January 2012 any agreement subsequently entered into should follow the VAT treatment described in section 2 below); or, The date of an employee's annual salary/benefits review.
HMRC will regard any salary sacrifice arrangements put in place after that date as a new agreement for VAT purposes which should follow the treatment described in section 2 below. This will be the case even if individual employees continue to receive the same tax benefits as before the review.
Any other review or renegotiation that leads to a change in the provision of benefits under a salary sacrifice agreement or to a change in an employment contract. This would be following one of the above events VAT will be due on any taxable benefits provided on or after 1 January 2012 by way of salary sacrifice.
Salary sacrifice agreements entered into on or after 28 July 2011 Agreements entered into on or after 28 July 2011 must provide for VAT to be accounted for in accordance with the guidance in the Revenue Brief i.e. with effect from 1 January 2012 VAT must be accounted for on amounts of salary foregone in return for taxable benefits.
In summary, all cycle2work arrangements where the agreement was signed prior to 28th July 2011 will be able to run their natural course without any requirement for the Employer to change the employees’ deductions or the VAT payable on those deductions. Halfords welcomes this update, as it will allow existing hire agreements to be unaffected. We can now focus time on ensuring your future cycle2work schemes offer your colleagues the best savings available in the market.
The employer will continue to benefit from NI savings. The Employee will also continue to benefit from NI & Tax savings, however, will not benefit from VAT savings from the 01st January 2012. Whilst the Cycle to Work scheme may not appear as attractive as it has done previously, there are still significant savings available to the employee and we believe that it will continue to be a popular salary sacrifice scheme, which compliments the Government Green Transport Plan.
For more information, please visit the HMRC website
Thanks to Halfords cycle2work, your employer can provide you with a new bike and the appropriate cycling safety accessories and – providing the main use of the bike is for commuting to work – you will have reduced national insurance and taxation on your gross salary.
This means you'll save a vast amount of money compared to purchasing a bike outright yourself on the high street or driving a petrol or diesel car. Ensuring you have a low-cost commute that is cutting your carbon emissions the more you cycle to work and combining regular exercise. What's more, by paying for this monthly from your salary (over 12 or 18 months), you'll hardly notice the cost – this is called a salary sacrifice.
What is a salary sacrifice?
A salary sacrifice means giving up part of your gross salary in exchange for a non-cash benefit – in this case, the bike and safety accessories. Employees will save at least 30% through the cycle-to-work scheme, over using any other payment method.
Am I eligible to cycle and save?
Your employer must be willing to run the scheme before you can acquire your bike. The scheme is available to UK taxpayers who pay their taxes under the PAYE system.
You can spend anything from £100 up to a maximum of £1,000 on a bike and accessories. This can work out to as little as £5 per month. Check out how much you can afford on our savings calculator.
The maximum limit of £1000 has been removed for instances where a third party with pre-existing FCA authorisation hires the items directly to the employee, even though the employer still pays for the cost through salary deductions.
Getting Started!
It's really simple to join – please see our How to Register page.
Savings explained* | |||
| Retail value of bike and accessories | £100.00 | £500.00 | £1000.00 |
| Gross monthly reduction** | £8.33 | £41.67 | £83.33 |
| Tax Savings** | £1.67 | £8.33 | £16.67 |
| National Insurance Savings** | £0.83 | £4.17 | £8.33 |
| Net cost per month | £5.83 | £29.17 | £58.33 |
| Total cost over 12 Months | £69.96 | £350.04 | £699.96 |
Total savings made | £30.00 | £150.00 | £300.00 |
* Price includes all costs in running the scheme over a 12-month period. Costs included can be used as a guide only and may vary subject to personal taxation.
**Assumes 20% Tax Rate and assumes 10% Employee NIC Rate.
Follow these easy steps once your employer or organisation has let you know they are running the cycle-to-work scheme.
Getting your bike is this simple...
1. Your employer has joined Co-operative Flexible Benefits Cycle to Work Scheme, and you can now choose a brand new bike and safety accessories from any Halfords, Tredz or from over 1000 independent stores. Please visit the store locator to find your local bike shop.
2. Sign up now – we will then send you login details.
3. You decide how much you want to spend on a bike and apply for that amount using the login details.
4. Accept the online terms and conditions for the scheme, and your employer will then see your application.
5. Your employer approves your application and you can then collect your brand-new bike once you have received a Letter of Collection (LoC) directly from Halfords. You hire the equipment and fund this via a salary sacrifice making huge savings in the process.
6. Congratulations – You can now cycle to work, save money and cut your carbon emissions.
Please use the link below to download the guarantor form and get started on your cycle-to-work journey. Save money and cut your carbon emissions.
A witness will be required to complete the guarantor form, so please ensure this can be fulfilled before completion.
Employee Sign-up Process
If your employer is set up for Cycle to Work with Co-operative Flexible Benefits and has an election window available you will be presented with the following options:
Once the order button is clicked you should then be presented with your Hire Agreement showing the terms of your request and estimated savings from the scheme, please give the Hire Agreement to your employer for them to approve your application.
The cycle to work scheme will allow you to save money and cut your carbon emissions with every commute.
The Office of Fair Trading has issued a Group Consumer Credit License allowing any employer to run a cycle-to-work scheme. The license allows you to hire equipment up to the value of £1,000 inclusive of VAT. An employer can then choose to offer whatever range of values within the £1000 limit that they deem appropriate.
This £1000 maximum limit has now been removed in instances where a third party with pre-existing FCA authorisation (such as Cycle2Work) hires the goods directly to the employee, even though the cost is still recovered by the employer through salary sacrifice deductions. This £1,000 maximum will also not apply if the employer is authorised by the FCA for another separately regulated activity.
The average limit set by Employers for the last 12 months was £1822 and the average transaction was £789 for a 12-month salary sacrifice.
To see the values available in your scheme, please click "apply now" and review the Min and Max options within the "letter of collection value" section. For more information about your scheme limit, please review your internal communications.
Cycle to work offers the largest range of bikes across the UK thanks to Halfords, Tredz and over 1000 independent stores. Employees can choose between the following types of bikes:
Cycles and cyclists' safety equipment are included. The tax exemption defines a "cycle" as "a bicycle, a tricycle or a cycle having four or more wheels, not being, in any case, a motor vehicle" (192(1) of the Road Traffic Act 1988 (c52.)).
An electrically assisted pedal cycle can be included under the scheme. Cyclists' safety equipment is not defined in the legislation and a common sense approach should be taken when selecting it. This could include:
Current guidance from HMRC states that bike Satnavs and cycle computers are not allowed within the Cycle to Work scheme.
The legislation that governs a cycle-to-work scheme states that the Employer must own the equipment, so it is not an employer contribution type scheme. There can be no automatic right for the Employee to own the equipment at the end of the Agreement. If they do, they cannot claim the tax exemption.
Therefore a cycle-to-work scheme operates as a loan: the Employer is technically loaning the equipment to the Employee for a fixed period. Although Employees do not own the equipment, they remain custodians of the equipment and are free to use it as they wish, providing it is mainly to ride to work.
Halfords has the largest selection of cycles and cycling safety equipment in the UK. Though you can also use Tredz and there are over 1000 independent stores which may also use.
Please use the store locator on the cycle2work website to find your nearest store and the location of participating independent stores.
If you leave before the end of the hire period, you must pay your employer the balance of the amount outstanding and this will be deducted from your final net pay. You may then have continued use of the equipment without further payment until the hire period expires, as you may be offered the opportunity to purchase the equipment for its then fair market value.
However, this transfer of ownership is the subject of a separate agreement and is not governed or influenced by the Hire Agreement you sign for this scheme.
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