Cyclescheme FAQs

Background information

1. Who are Cyclescheme?

Cyclescheme are an independent company created to help both employers and employees make the most of the Green Transport Plan Initiative and associated tax concessions offered by the Chancellor.

Cyclescheme use their industry experience and trade contacts to get you riding to work on a bike of your choice from your local preferred bike shop.

2. Who is entitled to use Cyclescheme?

Under this agreement, employees of Oxford Brookes University who have contracts of employment that outlast the duration of the salary sacrifice period of 18 months can benefit from obtaining a tax-free bike and accessories (safety equipment). See also FAQ 12.

3. Why use Cyclescheme?

Cyclescheme customers are not limited to any particular bike or accessory brands and therefore can choose the best for quality and value-for-money. This results in the optimum package of bike, accessories and safety equipment.

Cyclescheme work with Brookes, under this arrangement, to ensure that Hire Agreement terms and conditions are written in full compliance with the Office of Fair Trading regulations, Her Majesty’s Revenue & Customs, Trading Standards and the Department for Transport.

Cyclescheme is also fully supported nationwide by 12 representatives who liaise with independent bike dealers providing up-to-date literature and point-of-sale material.

4. What support will Cyclescheme offer to you when the scheme is running?

We will offer full support for handling your queries, and advice on choice of bike and safety equipment. Our Cyclescheme partners (the cycle shops in your area who are partnering with Brookes and Cyclescheme) will also be your local port of call for test riding etc. Once the bike package is purchased these local bike shops will also handle servicing and any warranty issues.

Savings and money matters

5. What is a salary sacrifice arrangement and how do I make my savings?

A salary sacrifice happens when an employee gives up the right to receive part of the pay due to them under their contract of employment 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. You are paying back the loan on your goods from gross – rather than net – salary for the 18 months of the hire period.

6. The actual amount of discount appears to be a bit vague – precisely how much do I save on my equipment?

Typical savings are 32% but the precise amount depends on your personal tax band. An individual being taxed at 40% will save a bit more than someone who pays standard rate tax. Oxford Brookes cannot reclaim VAT in the normal way so the savings are not as great as with a VAT-registered company. See the Cyclescheme calculator.

7. Is there any limit on the price of the bike I can obtain?

Yes. The limit is £1,500 including accessories and VAT.

Ownership

8. Is the bike mine straight away?

No, the bike and goods remain the property of Oxford Brookes University until the hire period finishes. At this point you should be given the opportunity to buy the bike at a fair market value. See FAQ 10 below for more details.

9. What happens if the bike gets stolen before I've paid for it?

It will still be down to you to complete the full payment even if you no longer possess the bike. It is very important to insure the bike, and any goods fitted to the bike, to safeguard against the losses following theft. You can obtain safety equipment from Cyclescheme’s partnering shops, where you can ask for Home Office-approved ‘Sold Secure’ D-locks and cable locks to conform to insurance companies’ requirements. See FAQ 18 below for more details.

10. What happens if I don't want the bike at the end of the loan period?

  • It's your choice whether you opt to buy the bike at the end of the hire period.
  • If you choose to become the owner of the goods, you will be offered the opportunity to pay the Fair Market Value for them from your net salary.
  • If you choose not to buy the bike you will be charged the equivalent of the Fair Market Value to dispose of the goods, probably to a charity.

See the fair value market process and frequently asked questions. See also FAQ 22.

How Cyclescheme works

11. How do I go about getting a tax-free bike through Cyclescheme?

The scheme is a voucher scheme and you will need to apply for a voucher to redeem against your goods when you go to collect them from the bike shop.

To obtain your voucher you will need to:

  • Visit your local bike retailer to choose your equipment and obtain a written quote
  • Go to www.brookes.ac.uk/services/hr/taxbreaks and follow links to order directly, if you are a computer user or:
  • Call Liz Drewett on x5816 if you are not a computer user and want your order placed for you
  • Complete the Hire Agreement document online and print a copy for your records or download it and return, along with your details and signature to: Liz Drewett, OCSLD, Room D106, Wheatley Campus, Oxford Brookes University, Wheatley, OXON OX33 1HX. For non computer users send Liz Drewett a copy of your quote form via the internal mail
  • Your eligibility will be checked for the scheme at this point
  • Receive your secure voucher within three weeks
  • Redeem your voucher at the bike shop and collect your goods (you must provide your photo and staff number to do this)
  • Start to pay back your loan from gross salary, via salary sacrifice. (Your first payment will be deducted from your salary in the month that you receive your voucher.)

Speak to Liz Drewett in the Directorate of Human Resources (x5816), Mary Horan in Estates and Facilities (x4704), or Cyclescheme (01225 448933) if you have any queries. In general the website should provide a good overview of the scheme

12. Are there eligibility criteria for employees?

Yes.

The Scheme is open to all full- and part-time staff of Oxford Brookes University whose term of employment has more than the period of the loan (18months) to run.

Participants are also required to:

  • Have successfully completed their probation period.
  • Ensure their monthly net salary equals or exceeds 50% of the total value of the voucher they choose (vouchers go up in £100s)
  • Ensure that the monthly repayment figure does not exceed 10% of take home (net) pay

To take advantage of the tax breaks that result from salary sacrifice please also note:

  • You need to be a UK taxpayer
  • You need to be over 18 years of age to comply with Consumer Credit Act legislation
  • You need to be earning more than the National Minimum Wage after your loan repayment has been deducted.

13. What is the payback period?

18 months with a monthly salary sacrifice.

14. What is the hire period?

18 months from date of voucher issue

15. How many times a week do I have to use the bike for work?

There is no requirement for you to cycle to work for a specified number of days throughout the year and there is no special requirement for you to record your trips. You can also use the bike for leisure at weekends and on holiday, although a bike purchased under Cyclescheme should be used for at least part of 50% of the trips you do to work. Please see DFT guidelines on bike schemes (PDF, 136KB) for more information.

16. Do I have to keep a record of my commuting mileage?

The Inland Revenue does not expect employees to keep a record of mileage.

17. Can I use the bike for local trips during the working day?

Yes, you can use your bike for business purposes during the working day, and this use is directly related to Brookes’ interest in running a bike scheme

Insurance

18. Is it my responsibility to insure my bike?

Yes, even though you are still paying for your bike through salary sacrifice.

19. What’s the best way to insure the bike?

Household policies are usually much cheaper than specialist policies but you must ensure that the insurer covers the bike when in storage away from your home. You also need to check that there’s no upper limit on a claim (if you have a reasonably expensive bike).

If your bike cannot be covered on your home insurance, Cycleguard (02476 851 000) is a reputable provider of such insurance and there are free services provided by Fetch (0870 460 8167) who will expedite your claim and ensure that you are able to replace your bike using the bike shop of your choice. Please note that it is your right to decide whether you use Cycleguard/Fetch or your household policy.

20. Can I claim a mileage allowance for using the bike for business trips?

No, since Oxford Brookes University own the goods you cannot claim mileage when using your Cyclescheme bike until the end of the salary sacrifice period.

Consumer Credit Licence

21. Does the University need a Consumer Credit Licence?

The government has issued a blanket consumer credit licence to all participating employers buying bike packages up to £1,500 including VAT. Therefore Oxford Brookes University has a licence in place. When you and Brookes sign the Hire Agreement, the resulting relationship is defined under the terms and conditions of the Credit Consumer Act.

Fair market value

22. What is the fair market value payment?

A fair market value payment is the amount that a willing buyer would pay to a willing seller to purchase certain property at a particular point in time. See also FAQ 10.

The fair market value has now changed, please see the following faqs relating to fair market value and the fair market value process which have been provided by Cyclescheme.

23. When do I pay the fair market value to make the bike mine?

At the end of the 18-month hire period the bike may be bought for a fair market value.

Getting the bike mail order

24. Can I get a bike from Cyclescheme mail order?

Cyclescheme's partner shops are capable of supplying bike packages mail order from their shops, under the government’s green travel plan. However, there are distinct advantages when buying from your local bike shop that will be the first port of call for advice, servicing, after sales and warranty.

Maintenance

25. Do I need to maintain the bike myself?

You are responsible for maintaining the bike for your own use. Your local shop will be able to advise you about necessary servicing depending on how you use your bike. They are also likely to give your bike a first free service once you have bedded it in.

Changing jobs

26. What happens if I leave my job before I’ve finished paying for my bike?

Under the terms of the Hire Agreement and the Credit Consumer Act, the agreement to pay your loan is “non-cancellable”. This means that you will need to settle all outstanding monies before you leave. The outstanding balances will be deducted from your final net salary payment. Settlement will be from net pay because once you leave Brookes, you also leave the bike scheme, and are no longer eligible for tax deductions.

Effects of salary sacrifice

27. I receive out of hours payments on top of my basic salary: will these be affected?

No. In calculating all other payments to you such as out of hours payments, your total unreduced pay will be used.

28. What happens when there is a pay award?

You will receive any relevant pay awards based on your unreduced salary.

29. How will salary sacrifice affect my pension?

The scheme may affect your pension but this depends on your particular pension scheme. If your employer’s contribution to your pension scheme is proportional to your gross earnings, these will be reduced by a salary sacrifice. It is important for you to check this out with your employer (change to name of department which deals with pensions).

  • Local Government Pension Scheme: if you contribute to LGPS your pension will not be affected as your gross salary, before salary sacrifice, is the amount that is pensionable.
  • Teachers Pension Scheme: if you are within four years of your intended retirement date, you need to be aware that your pension could be affected, as the pension calculation will be made on your salary after salary sacrifice. If you are more than four years from retirement, your pension should not be affected.
  • Additional Voluntary Contributions (AVCs): if you have elected to pay AVCs these could be affected by participation in this offer. You should speak to the administrator of your AVC scheme.

NB: It is likely that salary sacrifice arrangements may have only a minimal effect on the payments/benefits described above

30. What happens if I go on unpaid leave?

During approved unpaid leave such as extended maternity leave or career break, up to a maximum of six months , the Hire Agreement period will be extended by the number of months when the salary was not paid and Oxford Brookes University was not able to collect payments

31. And maternity/paternity/parental/sickness leave?

Your reduced income may also have an effect on the following:

Statutory maternity pay : Employees with sufficient service and who meet certain conditions may be entitled to statutory maternity payments during a portion of maternity leave which will be affected by participation in the Bikes Scheme. Although statutory maternity pay is a flat rate for part of the qualifying period, the first 6 weeks are usually paid at a rate of 90% of average weekly earnings. During this period, normal deductions will continue to be made. When you go on maternity leave, payments will be suspended until either you return or you resign from the post. If you return, payments will be restarted. If you resign, you will need to pay the balance due, as described in FAQ 27.

During maternity/paternity/parental/adoption leave: you will continue to have the bike and equipment on loan during your absence with your gross salary still at the reduced level according to the salary sacrifice arrangements. You will continue to have deductions made from any payments you are receiving and/or will accrue a debt that will be recovered as soon as you return to work and receive a payment from the University

32. What happens with if I am made redundant or my contract is terminated?

Employees with sufficient service and who meet certain other conditions may be entitled to statutory payments on redundancy. It is possible, though unlikely, that such payments could be affected when you join the scheme.

If you leave Oxford Brookes University before the final deduction has been made from your salary you will be obliged to pay the remaining amount in full, as described in FAQ 27.

33. Does it affect my student loan payments?

Yes. Your student loan repayment is 9% of your earnings over 10k. This will alter as the trigger point is based on the salary on which you are liable to pay National Insurance Contributions (NICS). Under salary sacrifice your total gross salary on which NI is paid will reduce, so your loan repayments will reduce.

34. Does it affect Childcare Tax Credit?

Current advice from the Inland Revenue suggests that you can still apply for Childcare Tax Credit whilst being in a salary sacrifice scheme. For more information check with your Inland Revenue advice line on 0845 300 3900

35. And Working Tax Credit?

The vast majority of staff at Brookes will benefit from joining the scheme. However your personal circumstances may mean that it is not beneficial. This is most likely to be the case for those on a low income affected by Working Tax Credit, which may cancel out the savings made on Income Tax and National Insurance Contributions. Please seek advice from the Inland Revenue Tax Credits helpline on 0845 300 3900

36. Although I will be better off financially, my gross salary will be less. How will this affect my credit status, eg when applying for a mortgage?

In replying to credit reference checks we will inform companies of the situation with regard to your total remuneration package. On the grounds that you are actually better off under this scheme, it can be seen that you should not be disadvantaged. However, all lending companies are different and Brookes can make no guarantees.

37. Do I need to tell the Inland Revenue about this benefit?

The bike scheme is a government-sponsored initiative that has been set up so that you do not have to pay tax on items bought under the agreement. There is no need for you to contact the Inland Revenue

38. Is there a credit check?

There is no credit check

39. What happens if I change my mind after joining the scheme?

Under the unique terms of the scheme it is not possible for you to cancel your loan. You are therefore committed to making the salary sacrifice for the duration of the loan period. If your employment is terminated during the loan period you will still be liable to complete payments identified in the loan agreement. This means that you must be sure you are happy entering the scheme and with the selection you have made.

I want to join the scheme – what next?

  • Decide if you are eligible by checking in at FAQ 12
  • Visit your local bike retailer and follow the steps set out in FAQ 11
  • Call Liz Drewett on 01865 (48) 5816 or Cyclescheme on 01225 448933 for more information, or use the steps on the website to order.