Pay As You Earn, and Save As You Ride, with the
Mr Cycles Cycle-to-Work Scheme
'If your employer signs up with Mr Cycles’ Cycle-to-Work Scheme you can take advantage of the big savings to be had as part of the Government’s plan to get people out of their cars and onto a bike. Save up to 42% - tax-free!’
Choose your bike, clothing and accessories from the wide range of quality brands available from Mr Cycles at his shop in Seaford and you could save up to 42% off the price AND spread the cost over 12 months!
There’s no cost to your employer – only savings. Mr Cycles handles the paperwork. Everybody wins!
Specialist financial advice, in connection with this scheme, is available free to employers from Tasker Osman & Co., Accountants, Newhaven.
Full aftercare for your bike is available from Mr Cycles and his team:
- All bikes supplied fully-assembled and ready to ride
- All bikes get a free service check 6-weeks after purchase, plus a 2nd service up to 12 months after purchase
- All Giant bikes come with a lifetime frame warranty and 1-year component warranty
- Qualified mechanics
- Trading Standards Approved
- Collect & Return service available
Mr Cycles is the only bike shop approved by East Sussex County Council Trading Standards as part of their ‘Buy With Confidence’ scheme.
Savings Example for a basic rate tax-payer:
Cost of bike, helmet, lights and lock = £500
Monthly cost = £24.47
Total cost = £293.61
You save = £206.38*
*Actual savings depend upon individual company and employee financial circumstances.
For further information contact Mr. CycleScheme (aka Rod) at his shop near Seaford railway station:
Mr Cycles, 26 Clinton Place, Seaford, BN25 1NP
Telephone 01323 893130
Frequently Asked Questions
What is the Mr Cycles Cycle-to-Work Scheme?
The Mr Cycles Cycle-to-Work Scheme is a government-approved, salary sacrifice scheme where an employee agrees to give up part of their salary for an agreed period (usually 12 months) in exchange for the loan of a bicycle and safety equipment. Payment is taken from the gross salary, before income tax and national insurance, so money that would have gone to The Taxman goes towards paying for the bike and equipment. Employers that can reclaim VAT usually pass this saving onto their employees as well saving even more. Employers save by paying less national insurance contributions because their wage bill is lower.
Refer to www.hmrc.gov.uk/specialist/salary_sacrifice.pdf for further details.
What are the savings?
Typical savings are between 32% and 42%, but the actual amount depends on how much tax the employee pays and the way the employer runs their scheme.
Higher rate taxpayers will save more, employees whose company cannot reclaim VAT (the NHS, for example) will save less.
Who qualifies for the scheme?
There is no minimum or maximum company size necessary to sign up to the scheme. To be eligible employees must:
- be paying PAYE,
- earn more than the National Minimum Wage after salary sacrifice. Employees who earn close to the National Minimum Wage following salary sacrifice may wish to discuss with their employer the option of loan or pool bikes,
- have a contract that does not end during the hire period.
There is no credit check for employees wishing to participate.
Under-18s can join the scheme if their guardian signs a guarantor agreement.
How does it work?
- Step 1. Once an employer has entered into an agreement with Mr Cycles any employees wishing to participate need to visit Mr Cycles in Seaford to choose the bike and, if required, safety equipment. Alternatively, employees can view bikes & accessories at www.MrCycles.co.uk.
- Step 2. The employee will be provided with a quote for the bike and accessories, together with an illustration of the costs involved. The employee will be provided with a Cycle-To-Work Scheme Hire Agreement to sign and pass to their employer for approval.
- Step 3. If the employer approves their application they will countersign the Hire Agreement and pay Mr Cycles Ltd for the full retail price of the bike and equipment.
- Step 4. Mr Cycles will then contact the employee to arrange collection of the bike and accessories.
- Step 5. Salary sacrifice then commences over the hire period (usually 12 months).
- Step 6. At the end of the initial hire period:
- the owner of the bike may choose to extend the hire period for an extra 31 months for a fee equivalent to 3% or 7% of the original value of the bike & equipment, or
- the employer may offer the employee ownership of the bike for a fair market value, or
- the employee can return the bike & equipment in good order.
Please note that although the above procedure applies to the vast majority of schemes, there are some variations to the above depending on how each employer’s scheme is set up.
What bikes are available?
Employees can choose any bike (including electric bikes, folding bikes and other specialist cycles) from the wide range of quality bikes supplied by Mr Cycles. Brands such as Giant, Trek, Marin and Raleigh offer hundreds of bikes to choose from. Please refer to Mr Cycles website www.mrcycles.co.uk for the full range. If the employer wants to supply bikes costing over £1000 (retail price including VAT) they will need to purchase an individual Consumer Credit Licence, so most employers limit the package value to £1000. Please note that obtaining bikes for friends and family is not permitted - the bike must be for the employee.
What accessories are available?
Mr Cycles can supply thousands of accessories and clothing items but under the Cycle-to-Work Scheme they would typically consist of the following:
- safety helmet and reflective items
- gloves, waterproof jacket & trousers, cycling shoes
- pannier rack & luggage
- child seat
- lights, lock, pump, puncture prevention & repair
Who actually owns the bike?
The bike and goods remain the property of the employer throughout the initial hire period, unless the employer uses a finance company to fund the bikes; in this case the finance company or funding bank will own the bikes.
Who is responsible for maintaining the bike and what happens if it is stolen?
It is the employee’s responsibility to maintain the bike. Mr Cycles staff will be able to advise about maintenance and servicing depending on how the bike is used and all bikes come with a free 6-week service. If the bike is stolen the employee will be liable for any outstanding monies without any tax exemptions, so it's very important that employees insure the bikes. Safety equipment including Home Office-approved 'Sold Secure' D-locks and cable locks can be obtained as part of the scheme.
What's the best way to insure the bike?
Household policies are usually the cheapest option but employees must ensure that the insurer covers the bike when in storage away from your home, and that the bike's value doesn't exceed the upper claim limit. If the bike can't be covered on a home insurance policy, we recommend Cycleguard (www.cycleguard.co.uk) for insurance (please quote reference 106530).
Does the bike have to be used for commuting?
Employees should use the bike mainly for commuting to work or between work places (at least 50% of the bike’s use should be for work purposes). However, the bike can also be used for non-work purposes and there is no need for employers to monitor individual usage or for employees to keep a mileage log. Please note that employees cannot claim business mileage allowance with a bike obtained under the scheme as the bike belongs to the employer.
What happens at the end of the hire period?
At the end of the hire period employees may be given the opportunity to buy the bike for a full market value, however this cannot be an automatic entitlement. The cost of full market value cannot be stated before or during the hire period as this could be considered a benefit in kind and therefore not be eligible for tax benefits. Many employers opt for Mr Cycles Ltd to take ownership of the bikes at the end of the hire term, in which case any offer sale to the employee will come directly from Mr Cycles Ltd.
What happens if an employee leaves their job or is made redundant?
Once signed, the Hire Agreement is non-cancellable following a cooling-off period of seven working days following collection of the goods. This means that if an employee leaves or is made redundant from their employment during the hire period they are obliged to pay the remaining salary sacrifice amount in full from net pay i.e. without any tax exemptions.
For further information please see the Department for Transport’s Cycle to Work implementation guide: http://www.dft.gov.uk/pgr/sustainable/cycling/cycletoworkguidance/