A brand new bike at almost half the cost

NHS Staff Cycle to work scheme as operated by SME HCI- check with your HR dept as you should be able to purchase a Montague or Swissbike under the Cycle to Work scheme or drop us an email and we provide you with the appropriate information. Please note that bikes supplied under the scheme are subject to quotation and that the current offers on the web site are for online buyers.

We are pleased to announce that we are now on the government run Cycle to Work Scheme, this is a fantastic way of getting a Bike. Read this to find out how- or more importantly get your boss to read it. Employers are the vital link in this tax saving chain

What is it?

Cycle to Work is the official name of the government scheme designed to make bike ownership financially easier for employees. It can halve the cost of getting a machine.

The rationale is that by offering tax benefits on bike buying, it aims to minimise traffic on our crowded roads, cut back on pollution and improve public health.

The scheme first started in 1999 but was known to few. It was rebranded Cycle to Work last year.

How it works

At its simplest, Cycle to Work cuts the price of a new bike in half if you are a higher rate 40% taxpayer and by just over 40% if you pay income tax at the basic 22% rate.
If you are a higher rate tax payer for example, and you choose a bike and accessories worth £500, you enter into a Hire Agreement with your Employer, who then deducts payments from your gross salary over a 12 month period. This is known as a salary sacrifice.

What is salary sacrifice?

Salary sacrifice happens when an employee gives up the right to receive part of their cash pay due under their contract of employment in return for a non cash benefit, which in this case is a cycle and any safety equipment needed.

Firstly, your company buys the bike VAT-free. Secondly, the bike is paid for over a period of twelve months, with the money coming directly from your wages. This means two things: you’re basically getting the bike interest-free for the length of the term repayments and you are saving both national insurance and income tax because the payment comes out before these are calculated and taken.

Bike & accessories cost (including VAT) £500 .00
V.A.T. saving £74 .47
TAX & National Insurance saving £147 .36
12 Monthly repayments (salary sacrifice) £20 .93
Total cost £251 .16
SAVING AROUND 50% OFF RRP £248 .84

The above example for a higher rate taxpayer shows savings of over 50%, a standard rate (22%) taxpayer would pay £285.13, saving around 43%.

Although the repayments may look higher than you expected and total more than you expected to save over the course of the year, the savings calculator is actually pretty accurate. If you calculate your net pay sacrifice over the term of your repayments, the total is more or less the same as on the savings calculator because you’re paying less tax over the year.

Who does the bike belong to at the end of the 12 month period?

For a nominal sum (usually 5% of retail value) the bike and safety equipment can be purchased from the Company at the end of the Hire period.

What if I leave before the end of the Agreement?

If you leave during the term, any outstanding monies owed should be taken from your final Net salary, however if this is not sufficient to cover monies owed, you will be required to pay your employer any outstanding money by cheque / cash within a specified period.

Is there a price limit that can be spent?

Under this Initiative the Government has provided a blanket Consumer Credit Licence to all participating Companies, allowing purchases for any one individual up to £1000.

How do I take part in the scheme?

Once your Employer decides to run a cycle to work scheme, getting a cycle and saving money couldn’t be easier. All your employer has to do is send us a purchase order for the cycle of your choice, could it be simpler?

You then sign a written Hire Agreement for 12 months with Your employer specifying the salary sacrifice to be made. This is regulated by the Consumer Credit Act 1974, and is non cancellable.

Once payment has been made by the employer, Montague Bikes .co.uk will contact you when the cycle is ready to collect.

Deductions are then made from your gross salary by your employer over a 12 month period.

Employers benefit from fitter, more punctual, more wide-awake staff. Employees benefit from better health and better bikes because their money goes further.

There is much made of the scheme, suggesting that your company must register with various organizations to run the scheme, this as far as we are concerned not the case, all you employer must do is accept that they will run the scheme, ie purchase and pay for the bike, recover the VAT and claim first year or writing down tax allowance on the bikes each year, it is that simple.

If your employer has opted to use a third party company to run the scheme on their behalf, please note that we do not currently participate in such schemes. These third party run schemes usually issue coupons or certifcates or in some cases require quotations