Cycle to Work Scheme (C2W)

by

Lewes Cycle Shack

What is a C2W scheme

• In essence a way for employees, who pay tax and NI by PAYE, to obtain a new bike and accessories by way of a Government approved tax savings scheme.

• It is paid for over 12 months by taking a reduction in pay equivalent to the cost of the purchase

About the scheme

• As a part of the Governments’ “Green Travel Plan” C2W is effectively intended to encourage the greater use of bicycles, both for the purpose of travelling to work and also for leisure use.

• There are no restrictions on use of the bike or checks on use for cycling to work.

• Our scheme fully complies with all the requirements of the scheme which has to be set up under the auspices of the Consumer Credit Act

The basis of the scheme

1. The employer buys the bike and allowable accessories/equipment/clothing

The basis of the scheme

2 The employee repays the total cost of the purchase to the employer by way of a “salary sacrifice” arrangement over 12 months.

The employee is responsible for insuring and looking after the bike.

The basis of the scheme

3 The employer claims back the VAT and capital allowance on the bike

The basis of the scheme

4 After three years ownership of the bike is transferred back to the employee at a nominal value.

Simple!!

How it Works in practice

• The employer enters into a simple agreement with LCS to supply a bike and equipment under the C2W scheme and advises employees they may now acquire a new bike and equipment up to the value of £1000.

How it works ... cont.

• Employee calls into either LCS shops or partner shop to choose their bike and equipment/clothing.

• This may take more than one visit to ensure the right bike is chosen.

• Employee takes away a quote once their choices have been made.

How it works ... cont.

• Employer confirms eligibility of the employee. (i.e. the employee is on a minimum 6 month contract and not earning less than the minimum wage rate).

• LCS issues paperwork:-

a) for signing by the employee

b) an invoice for the bike and equipment

c) a salary sacrifice notification for the payroll department.

How it works ... cont.

• Payment of the invoice is made by the employee to LCS.

• The employee can now collect their new bike and any additional items ordered under the scheme.

• Payroll advised to amend salary for the agreed term of repayment.

The Cost Savings!

The Employer:

• Reduced NIC from the salary reduction

• Claims back VAT. (This saving is not passed on to the employee)

• Capital allowance (20%) claimed on the total invoice value.

The Cost Savings!

The Employee

• Reduced tax at higher rate of the employee

• Reduced NIC £

• ie: Purchase cost 750.00

PAYE saving @ 20% 150.00

NI saving @11% 82.50

Net pay reduction 517.50

Monthly salary sacrifice 43.12

The benefits!

• Staff benefit from easy and low cost bike purchase

• Fitness and health aspects

• Team building events

• Arrive at work energised

• Cost savings for employer

What they say!

• “So far, 7 members of staff have taken part in this scheme, and more are interested. Staff are delighted with the savings made, and the simplicity of the process. I would particularly like to thank Paul for making it all so simple to set up and run the scheme”

• Some happy scheme members:

Harvey’s of Lewes; GMC Group; BSW Building Services; Wightman & Parrish.

Enjoy!!

Any Questions?