CYCLISTS and mountain bikers have been taking up the chance to get a new bike - and use it to cycle to work.
Statistics sourced today revealed that more than 20,000 bikes have so far been purchased by mountain bike enthusiasts and general cyclists under the Cyclescheme.
The initiative was launched by the Government in 2005 as a way of encouraging more people to use green friendly transport options to work.
Some cyclists have bought bikes worth £2,000 and saved around £800.
But the scheme has come under criticism from some employers who have found the paperwork just too much of an uphill slog.
And changes to the tax system from April 2008 mean the scheme is less lucrative than it used to be.
The logic of the scheme is that tax discounts are offered to workers who want to buy a bike to commute to work. It means that they can buy a bike at a much cheaper price than normal if it is to be used to cycle to work.
On a £1,000 bike you would save £412.77m if you earned around £30k.
Total cost of bike and accessories:
£1,000.00
VAT saving on bike and accessories (NB helmets are exempt from VAT):
£148.94
Net cost of bike and accessories:
£851.06
Income tax saving over hire period:
£170.21
NI saving over hire period:
£93.62
Final cost of bike & accessories:
£587.23
Total saving:**
£412.77
Gross monthly salary sacrifice, based on 12 month hire period:
£70.92
Net monthly salary sacrifice, based on 12 month hire period:
£48.94
Percentage saving over RRP:
41.3%
However, from April 6, 2008 the basic rate of tax will be reduced from 22% to 20%, resulting in a slight decrease in savings through the scheme.
If your annual gross salary is between £40,000 and £42,000 your savings may be reduced due to the position of the tax and NI thresholds, as you will be paying lower rate tax (20%) and higher rate NI (1%).
You can work out exactly how much you save with an online calculator.
Since launching three years ago, 22,000 bikes have been bought by commuters.
And around 3,500 employers are currently working to help people buy bikes with tax discounts.
More than 1,000 independent bike dealers are signed up - offering a range of advice and services. They are classed as Cyclescheme Partner Stores.
A comprehensive quesion and answer article has been compiled by the organisers on the home website.
concerns
Several online business forums are reporting that employers are finding it increasingly difficult to cut through the red tape.
In some cases, companies are refusing to offer the discounts unless a large group of employees want to take part claiming it is simply not worth their while.
Sarah Breese, from Cyclescheme, said: 'Cyclescheme is constantly developing its secure online ordering system (Extranet) to minimise admin for employers. The Extranet eliminates any unnecessary admin as most jobs can be carried out with the click of a mouse, 24 hours a day. The provision of tailored Hire Agreements, promotional material, procedural flexibility, and telephone support ensures that offering tax-free bikes for employees is as simple as possible. Testimony to this, Cyclescheme has recently received praise for its support and efficient procedure from a local authority after providing around 1000 tax-free bikes to their employees.'
FURTHER INFORMATION:
http://www.cyclescheme.co.uk
http://www.booost.uk.com/
http://www.halfordsb2b.com/bikes4work-schemes.asp
http://www.hmrc.gov.uk/.../salary_sacrifice.pdf
http://www.dft.gov.uk (search for ‘Cycle to Work’)
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