A question we are asked a lot is “How much does the Cycle to Work Scheme cost employers?”. The short answer is, nothing. In fact, employers actually save money on the Cycle to Work scheme. This is an sustainable and self-funding staff benefit. Here we explain how this is possible.
When an employee wishes to take part in the Cycle to Work scheme, their employer needs to pay for the voucher upfront. The voucher covers the full cost of the cycle and any accessories. The employer will recover the voucher cost through a salary sacrifice agreement with the employee. Salary sacrifice periods can range from 12 – 60 months, so employers should be sure they can wait the agreed period to recoup the expenditure. Crucially, during the salary sacrifice period, employers will actually save money as the employer’s National Insurance will be reduced. This is because employers only pay NIC on the cash element of the salary, not the value of the Cycle to Work benefit.