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Employee benefits: why cycle to work schemes are in demand

Cycle to work schemes are one of the few salary sacrifice employee benefits that avoided being trimmed back by the government’s new rules earlier this year. Derek Hatton, founder and director of commercial provider Bike2Work Scheme, explains what this has meant...

Since April, new rules governing the use of salary sacrifice schemes in the UK have been in force. For the uninitiated, salary sacrifice schemes have historically been a way of providing employee benefits by allowing employees to pay for something out of their gross salary, before they pay tax or National Insurance.

The new rules mean that employees are can no longer avoid paying tax on things bought via a salary sacrifice scheme, although they will still save on National Insurance. Naturally, from an employee benefits perspective, this is disappointing and limits the savings that can be made.

There are, however, some employee benefits that are exempt from the new rule changes. These include pensions, childcare, ultra-low emissions cars and cycle to work schemes. As the founder and director of one of the scheme providers, I’m pleased that this is the case – not because it’s in our own interests, but because, like the other exemptions, the cycle to work schemes offers real value to society.

The most obvious benefits of the scheme are that it allows employees to save money buying bikes and cycling equipment for commuting to and from work, while saving employers money on National Insurance contributions. In addition, though, it improves the health of individuals, makes workforces more productive by improving their overall health, reduces emissions by taking cars off the road and reduces the need for car-parking infrastructure at workplaces.

Unsurprisingly, at Bike2Work Scheme, we’ve seen demand from employers increase since April. As options for salary sacrifice schemes have been pared back in other places, cycle to work schemes have naturally become a more attractive employee benefit to offer, relatively speaking. What's more, we're seeing more employees pushing for cycle to work schemes at their workplaces, as they seek to both keep fit and save money while times are tight.

Of course, we’d encourage any business to look at setting up a scheme, with advantages for employees, employers and society as a whole. If it’s something your business is considering, we offer a free, impartial guide about choosing providers and best practice for setting up a scheme too. Happy pedalling!

Derek Hatton is a former Labour politician, broadcaster and businessman. He is also the founder and director of Bike2Work Scheme, one of the commercial providers of the UK’s cycle to work scheme.