- Frequently asked Questions
does the bike belong to?
|It belongs to
the company for the 12 or 18 month period of the salary sacrifice(up to employer). At the
end of this period, the company may transfer title of the goods.
much will this cost the company?
|Nothing! It really
is free. The company is buying the bike, and then leasing it back
to the employee until the full amount is recovered. You will even
save money by not paying your employer's contributions of the amounts
that would have been deducted for national insurance.
the company need to apply for dispensation from the Inland Revenue
or from HM Customs & Excise to run the Pedal2Work programme?
|No. As long as
all Pedal2Work forms are completed correctly, there is no need to
apply for an official dispensation.
my company need to apply for a credit licence?
are allowed to run salary sacrifice schemes without a specific credit
licence as long as the purchase amount doesn't exceed £1,000.
is a salary sacrifice arrangement and how are savings made?
|A salary sacrifice
happens when an employee gives up their right to receive part of their
pay in return for the employer's agreement to provide some form of
non-cash benefit, in this case the loan of a bicycle and related equipment.
A summary of the advice from the HM Revenue & Customs is available
from their website at www.hmrc.gov.uk/specialist/salary_sacrifice.pdf.
The employee is paying back the loan on your goods from gross, rather
than net, pay for the hire period - hence allowing them to benefit
from income tax and NI relief.
there any eligibility criteria for employees?
Yes. The Scheme
is open to all full, part-time and contract staff whose term of
employment is more than the period of the loan (usually 12 months).
Staff must have completed any probabtion periods if applicable.
To take advantage
of the tax breaks that result from salary sacrifice please also
note employees must:
- be UK taxpayers
via the PAYE system
- be over 18 years of age to comply with Consumer Credit Act legislation
- be earning more than the National Minimum Wage after your loan
repayment has been deducted.
we use the Pedal2Work programme even if we are not VAT registered
or exempt from VAT?
|You can. There
are still great savings to be made, even without being able to reclaim
support will Pedal2Work give when the scheme is running?
offer full support for handling your queries, and advice on choice
of bike and safety equipment. South Downs Bikes will be your local
contact for test riding etc. Once the bike package is purchased South
Downs Bikes will also handle servicing and any warranty issues.
points to be aware of
Bicycles bought under the Pedal2Work programme must be used primarily
for travelling to and from work, and they must be suitable for that
VAT may be reclaimed on bicycles if they are purchased to implement
a green travel plan, reduce car use or increase staff health levels.
Leavers or retirees from your company become responsible for any outstanding
amounts. These are usually subtracted from final salary payments,
and become a taxable benefit.
At the end of the lease period, the employer may transfer title of
the goods to the employee for a nominal fee.