November 26th 2014

By Kevin D. Ferguson BA CA, Partner , JRW Chartered Accountants

Kevin D. Ferguson BA CA, Partner , JRW Chartered Accountants
Kevin D. Ferguson BA CA, Partner , JRW Chartered Accountants

There is no absolutely no doubt that cycling has enjoyed a boom in recent years with the amazing success of British cyclists in the Tour de France and the 2012 Olympics really capturing the public’s imagination in the sport.  Sir Bradley Wiggins, Laura Trott, Sir Chris Hoy, Victoria Pendleton, Chris Froome and Mark Cavendish, just some of the stars of British cycling who are now household names.

In fact ‘The Olympic Cycling Effect’ is thought to have a lasting positive influence on participation in the activity with wide spread support evident for the growth of cycling in the UK. With an increasing number of businesses and organisations also helping to make cycling part of the fabric of everyday life, cycling has now become a mainstream activity in the UK.

The interest in and support for cycling in this country has never been bigger, as shown this Summer when an estimated 2.5 million people lined the roads of Yorkshire for the first two stages of the Tour de France – that’s half the population of Yorkshire! No surprise then that a proposal to hold the Grand Depart of the Tour de France in Edinburgh in 2017 is gathering pace and considerable excitement here in Scotland too.

But away from the elite end of cycling, more and more of us are using our bikes as a great way of keeping fit and as a convenient method of transport. Here in the Scottish Borders we are lucky enough to live in an area which is becoming known as Scotland’s leading cycling destination, whether that’s world class mountain biking trails at 7stanes or superb road cycling on hundreds of miles of way marked routes on our uncongested roads.

Leaving leisure cycling aside however, more people than ever are also choosing to leave the car at home and cycle to work instead. If that includes you, you probably know the difference between a Schrader and a sprocket but do you know how cycling to work can be good for your pocket too?

Cycle to Work Scheme

The Cycle to Work Scheme is a tax exempt employee benefit operated predominately through salary sacrifice. It provides an affordable and cost effective way to encourage individuals to take up cycling. The scheme encourages employers to loan bicycles and safety equipment to employees for the purpose of cycling to, from and at work.

At the end of the loan period the employer may choose to give the employee the option to purchase the equipment. Typically this would be offered at substantially less than the original value. Participants in the scheme will sacrifice a part of their salary in return for the non cash benefit. As a result they will save income tax and National Insurance contributions on the cost of the bike, saving between 32% and 42% on the overall cost depending on individual circumstances.

As the benefit is covered by a tax exemption, the employer will not have to account for employers NIC (at up to 12.8%).  Employers of all sizes can implement the scheme for their employees. Employers will be able to treat the cost of the cycle equipment as capital expenditure and claim capital allowances in the normal manner. In most cases the equipment will qualify for Annual Investment Allowance.

With the obvious health benefits that cycling can bring and the financial incentives on offer, we are sure you will agree that cycling to work really does add up. There really has never been a better time to get on your bike!

JRW Chartered accountants in Edinburgh, Galashiels, Hawick, Langholm and Peebles.