August 2024 - Payroll

This month sees the return of the annual Cycle to Work day on Thursday 1^st August and here at Albert Goodman we encourage all of our colleagues to partake in the day with a variety of initiatives.

One such initiative for Employers to encourage their Employees to become greener with their commute to work is through the Cycle to Work Scheme which was introduced in 1999 and encourages employees to reconsider transportation through tax savings.

Cycle to work operates as a ‘salary sacrifice’ employee benefit. This means that the employee agrees to give up part of their salary in exchange for a benefit – in this instance the benefit is a bike and/or accessories. The salary sacrifice is taken from the employees’ gross salary (before tax) which means that the employee will pay less Income Tax and National Insurance. Care must be taken with those employees earning just above the National Minimum Wage (NMW) rate to ensure that any deductions being made in respect of the cycle to work scheme do not reduce their salary to below the NMW. It is also worth noting that at least 50% of the cycles use must be for qualifying journeys (i.e. commuting to work purposes).

Straight away your own organisation will make savings of 13.8% through National Insurance contributions. Employees too will generally experience a healthier lifestyle, improved mental wellbeing and effective working.

Any employer, of any size, across the public, private and voluntary sectors can run a cycle to work scheme. However, the income tax and national insurance benefits only apply to staff who are treated as employees for tax purposes.

For more information on setting up a scheme we would recommend that you first contact HMRC for guidance – there are also several organisations who can help set up a scheme for your Employees once you are ready to launch a scheme of you own!