University of Edinburgh Bicycles+ Scheme

Transcription

1 University of Edinburgh Bicycles+ Scheme Bicycles+ offers University employees an opportunity to obtain a bike for less than normal cost. If you are thinking about using a bike to help you commute, this may be of benefit to you. The scheme is available to join throughout the year. These guidelines describe how the scheme works and should be read carefully before deciding to join. About Bicycles+? Bicycles+ is the University of Edinburgh s Cycle to Work Scheme. This is a Government green transport initiative which allows the University of Edinburgh to offer employees the option of hiring an adult bicycle and cycle safety equipment over a 12 month period, free of tax and National Insurance, by way of a salary sacrifice. The bike must be used mainly for travelling to and from work, at least 50% of the time it is in use, in order to benefit from this exemption. This represents a saving of up to 41% on the cost of the bicycle, depending on your tax rate. Cyclescheme The University has selected Cyclescheme to supply the bikes for the Bicycles+ Scheme. By using Cyclescheme, University employees can use any one of over 1000 participating bike shops in the UK to select a bike and equipment. To find out which bike shops near you participate in Cyclescheme enter your postcode into the Cyclescheme website: How it works The scheme is open for University employees to join throughout the year. If you choose to join the scheme the University will provide you with a bike (and safety equipment if required) on loan in return for you agreeing to nominate a specified amount of your salary to be deducted for this purpose for a 12 month hire period. The specified monthly deduction from your gross salary will be 1/12 of the total cost of the bike and safety equipment. This nominated amount will not be subject to tax or National Insurance deductions. At the end of the 12 month Hire Agreement period the University still owns the bike and safety equipment, however it may seek to dispose of the bike and safety equipment at a fair market value. An explanation of how this fair market value is calculated is available in the What happens at the end of the 12 month Hire Agreement? section of this document. Joining the scheme is very straightforward: Step 1 Step 2 Step 3 Step 4 Read through the Bicycles+ information (including the FAQs). Further information is also available on the Cyclescheme website Select a bike and safety equipment (if required) by visiting a participating bike shop. Details of participating shops can be accessed through The shop will provide you with a paper quote for the package you select. Use Cyclescheme's online tool to apply for your chosen package by entering your details and the quote online at (select request your certificate ). You will also be asked to agree to the terms and conditions of the Hire Agreement. Once you have requested a secure voucher, the University will confirm if you are eligible. If you are eligible the University will approve the request. Cyclescheme will send the University an invoice for the bike package. As soon as the invoice has been paid your voucher will be posted to your home address. Transport and Parking Office, February 2010 Page 1 of 7

2 Step 5 Contact the shop to check your bike and equipment is ready to collect. You must take the vouchers and some photographic ID with you (such as your staff card). Step 6 Normally you can expect your repayments, by deduction from your gross salary, to start from the next available pay date after you have received the voucher. Timescales Employees of the University of Edinburgh will be able to join Bicycles+ through Cyclescheme at any time throughout the year. It is estimated that the whole process should take no more than 2-3 weeks once you have requested a voucher. What cycle safety equipment can I choose to include in the scheme? Your choice of bike must be suitable for journeys to and from work. As well as the bicycle, the package you choose can also include cyclists safety equipment, including: Helmets Bells and horns Lights Reflective clothing including jackets, gloves and over trousers Mirrors and mudguards to ensure riders visibility is not impaired Cycle clips and dress guards Panniers, luggage carriers and straps to allow luggage to be safely carried Locks and chains to ensure cycles can be safely secured Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs Please note the above is not a comprehensive list of what safety equipment is available to choose. Cycle safety equipment can only be hired through the Bicycles+ scheme if you are also hiring a cycle. However it is not a requirement of the scheme that you also hire cycle safety equipment. Eligibility to join Bicycles+ To be eligible to join Bicycles+ employees of the University of Edinburgh must: Have contracts of employment that outlast the duration of 12 month salary sacrifice period Have a minimum of 3 months service with the University Be 18 years or over in order to comply with the Consumer Credit Act (if you are under 18 years please contact the Transport & Parking Office for further advice) Pay tax via the PAYE system Not drop below the minimum wage once the loan repayment has been deducted Use the bicycle mainly for travelling to and from work at least 50% of the time it is in use, in order to benefit from the tax and National Insurance exemption. This can be a journey in whole, or in part e.g. to the train station, or between offices If you are unsure of your eligibility for the Bicycles+ scheme please contact the Payroll Office on They will be able to advise on the tax and National Insurance issues, particularly if you are already on Pensions+ or are a member of the Childcare voucher scheme. Transport and Parking Office, February 2010 Page 2 of 7

3 What savings can I expect to make during the scheme? You can select a bicycle and associated safety equipment up to a total value of 1000 including VAT. The hire payments are made via salary sacrifice in 12 monthly instalments. The payments are free of tax and national insurance which means you could make a saving of up to 41%. At the end of this 12 month Hire Agreement period the University may seek to dispose of the bike and safety equipment at a fair market value. For an indication of the savings you could make through joining Bicycles+ use the calculator on the Cyclescheme website and enter de3bd7 as the employer code The University implements guidelines from the HMRC in calculating the fair market value of the bike. More information can be found at Bicycles+ Conditions The bicycle and equipment will remain the property of the University of Edinburgh until the end of the 12 month hire period, when the University may seek to dispose of it at a fair market value. Therefore: You must make sure that the bicycle and equipment is insured against theft, loss or damage. You should be aware that you are responsible for the condition of the bike, and any loss or damage to it after you have signed the hire agreement. The easiest way to insure the bike is to get it added to your household contents insurance, if it is not already covered. Replacement equipment is not available under the scheme. If the bicycle equipment goes missing or is damaged, you will still have to continue to pay the monthly salary sacrifice for the remainder of the 12 month hire period You must not hire out, transfer or otherwise dispose of the bicycle and equipment You must not make alterations to the bike or take it out of the UK during the hire period As Bicycles+ is a hire agreement you do not have legal title of ownership on the equipment If you cease employment with the University before the end of the hire period, the outstanding balance will be deducted from your last net salary payment. This will mean that you lose any tax and National Insurance saving on any outstanding balance What happens at the end of the 12 month Hire Agreement? At the end of the 12 month Hire Agreement period the University still owns the bike and safety equipment, however it may seek to dispose of the bike and safety equipment at a fair market value. The HMRC have now clearly set out how an employer should identify the fair market value of a bike and as such, the price at which the University may seek to dispose of the bike. From 1st February 2011, the University will be implementing the guidelines from HMRC. The fair market value of a bike will be calculated by the University using valuation guidance produced by the HMRC. The fair market value is calculated on the original cost of the bike plus any safety equipment bought at the time of purchase which is fitted to the bike (e.g lights and bike bells). Calculating the fair market value excludes any safety items which are worn by the cyclist for example, a helmet or cycle clothing which may have been purchased at the time. To gain an indication of the value of the bike and safety equipment, please see the Valuation Table below: Transport and Parking Office, February 2010 Page 3 of 7

4 Valuation Table: Calculation of the fair market value of the bike, considering the original price and age of the bike. Age of cycle Original price of the cycle less than year 18% 25% Original price of the cycle months 16% 21% 2 years 13% 17% 3 years 8% 12% 4 years 3% 7% 5 years Negligible 2% 6 years and over Negligible Negligible During the last month of the 12 months of the Bicycles+ Hire Agreement period, the University will contact you by letter to your home address. This letter will give you the opportunity to choose one of three options: Option 1: You can choose to continue to loan the bike from the University. In this instance, the bike will remain the property of the University and no further hire charges will be made; OR Option 2: You can purchase the bike at the fair market value which will be calculated as described in the Valuation Table above; OR Option 3: Return the bike and safety equipment to the Transport and Parking Office. Where a bike is transferred to an employee at a point between the time periods shown in the Valuation Table above, the percentage shown in the table will be adapted on a sliding scale down to the next year. If you cease employment at the University within 6 years of the original purchase date of the bike then you will have the option to take ownership of the bike but you will need to pay the amount as advised in the Valuation Table above. There is no obligation to take ownership of the bike and equipment, however should a member of staff choose not to then they must return the equipment to the Transport and Parking Office. IMPORTANT POINTS TO CONSIDER The effect of Bicycles+ on work related pay benefits and pension entitlement Most employees will benefit from Bicycles+ but there may be a few members for whom it is not advantageous. If you are at all unsure about whether or not you should participate in Bicycles+ you should seek your own financial advice. Details of an independent financial advisor (IFA) near you can be found by calling IFA Promotion Ltd on or at: If you require further advice please contact the payroll office on who will be able to advise on the tax and National Insurance issues, particularly if you are already on Pensions+ or are a member of the Childcare voucher scheme. There may be an impact on your entitlement to benefit payments such as Statutory Maternity or Paternity Pay, Statutory Sick Pay and Working Tax Credit, as they will be calculated on your reduced pay. There may also be an impact on your state pension. We advise you to seriously consider the effect that a reduction in pay may have before you decide to join the scheme. All the background information on Bicycles + is available at For more information please transport@ed.ac.uk or call Transport & Parking Office, Estates & Buildings, Charles Stewart House, 9 Chambers St, Edinburgh EH1 1HT Transport and Parking Office, February 2010 Page 4 of 7

5 Frequently Asked Questions (FAQs) 1. Can I join the scheme again if I have been a member of the scheme previously? Yes, you will be able to join the scheme again, but only once your previous Hire Agreement has ended and the ownership of the bike and equipment you hired has been determined. 2. What is salary sacrifice and how are the savings made? A salary sacrifice occurs when an employee agrees to a reduction in pay in return for the employer providing a non cash benefit. The reduction comes out of the employee s gross, rather than net pay. This causes a reduction in income tax and National Insurance payments, which is where the savings are made. 3. When will I start to make the repayments? Normally you can expect your repayments, by deduction from your gross salary, to start from the next available pay date after you have received your voucher. 4. Can I cancel my order or change my choice once I have submitted my order? Once you have agreed to the Hire Agreement and it has been authorised by the University of Edinburgh you are committing to the full 12 payments. The Hire Agreement is regulated under the Consumer Credit Act and is not cancellable. 5. Is there a restriction on the type of bicycle I can choose? The bicycle must be suitable for travelling to and from work. For this reason children s bicycles are not available to hire under the scheme. All other types of bikes are suitable to choose under the scheme including electric and folding bikes. 6. Can I choose more than one bicycle? Yes, providing that you use both for commuting to work. For example, you may have a summer route and a winter route to work, both requiring different things from a bike. Please note that the maximum that can be spent on all bicycles and equipment is 1,000 (including VAT). 7. What happens if I want a bicycle that costs more than 1,000? The maximum you can spend on your bicycle and safety equipment is 1,000 (including VAT). If you do require additional items that will take you over the 1,000 limit, you will need to purchase these on a separate transaction and as such they will not be part of your salary sacrifice arrangement. The view of the HMRC (Inland Revenue) is that if an employee was to contribute towards the value of a bike or equipment, this would be deemed shared ownership and the hire would not be covered by the tax exemption. 8. Can I choose just safety equipment or just a frame rather than a complete bike? No, you are unable to choose just safety equipment on its own as part of the scheme and a complete bike must be a part of the hire agreement. 9. Must I choose safety equipment on the scheme? No, if you only require a bicycle and currently have all the related safety equipment you need, it is not a requirement that you must choose safety equipment. 10. Who owns the bicycle? Although you will have full use of the bike for the period of the hire, in order to obtain the tax advantages it is a requirement that ownership of the bicycle remains with the University of Edinburgh until the end of the salary sacrifice agreement where it may seek to dispose of the bike and safety equipment at a fair market value. Transport and Parking Office, February 2010 Page 5 of 7

6 11. What happens if the bike or equipment is damaged, lost or stolen? It is your responsibility to insure the bike against damage and theft. If the bike is damaged or stolen the hire agreement is not cancellable and you will still be required to pay for the bicycle and safety equipment hired. If damaged, you will also be required to pay for repairs. It may be possible for bikes can be covered by your household content insurance and treated like any other possession. Check your insurance policy and make sure it covers the bike nationwide and that it pays for a replacement in case of a total loss. There are insurance companies that can cover you in case of loss of or damage to cycle and accessories in a crash, theft of cycle and accessories (but not theft of accessories alone) and malicious damage. Some also provide a third party liability cover, legal aid and personal accident cover. 12. What happens at the end of the 12 month Hire Agreement? At the end of the 12 month hire period, the University may seek to dispose of the bicycle and safety equipment at a fair market value. At the end of the 12 month Hire Agreement period the University still owns the bike and safety equipment, however it may seek to dispose of the bike and safety equipment at a fair market value. HM Revenue and Customs (HMRC) have now clearly set out how an employer should identify the fair market value of a bike and as such, the price at which the University may seek to dispose of the bike. From 1st February 2011, the University will be implementing the guidelines from HMRC. The fair market value of a bike will be calculated by the University using valuation guidance produced by the HMRC. The fair market value is calculated on the original cost of the bike plus any safety equipment bought at the time of purchase which is fitted to the bike (e.g lights and bike bells). Calculating the fair market value excludes any safety items which are worn by the cyclist for example, a helmet or cycle clothing which may have been purchased at the time. To gain an indication of the value of the bike and safety equipment, please see the Valuation Table in the section above called What happens at the end of the 12 month Hire Agreement? There is no obligation to take ownership of the bicycle and equipment, however should a member of staff choose not to then they must return the equipment to the Transport and Parking Office. 13. What if I leave the University of Edinburgh before I have repaid the full amount? You will have to repay the outstanding amount that is left to pay from your final payslip. However, this amount will not be tax-free as it will be taken from your net salary. So for example, if you leave a year into the hire agreement for a 300 bicycle, and you have paid 200 so far, you will have to pay the remaining 100 outstanding on the bicycle. You will not be entitled to receive the Tax and National Insurance savings on this outstanding 100. However, you will still have benefited from saving the Tax and National Insurance contributions on the first 200. If your final salary does not cover the outstanding amount, you will be sent an invoice for the remainder of the balance. Please think very carefully before joining the scheme. If you think you may leave employment with the University of Edinburgh before the period of hire is over, it is not recommended you join. If you enter into an unpaid leave situation during the Hire Agreement you must notify payroll immediately. The salary sacrifice payments will usually be suspended until you return to work or paid leave at which point they will recommence. 14. What support do I get with my new bicycle? Many cycle shops offer a free first service, approximately 6 weeks after collecting the bike. You are responsible for maintaining the bicycle throughout the hire agreement period. Most shops offer a maintenance service, and some provide cycle maintenance training. At various times through the year the University offers staff and students free cycle maintenance courses (provided through The Bike Station). These are advertised on the Transport and Parking website The City of Edinburgh Council also provides cycle maintenance courses through the Adult Education Programme (these are not free courses) Transport and Parking Office, February 2010 Page 6 of 7

7 15. What happens if my bicycle has a warranty problem during the 12 month hire agreement period? When you choose your bike, the shop will advise you of the warranty period, as they vary with each bike. If you experience problems within the duration of the warranty period, take your bicycle back to the shop who will liaise with the supplier on your behalf. 16. Do I need to keep a record of the mileage while leasing the bike during the scheme? No. The Inland Revenue do not expect you to keep a mileage record of your usage of the bike. 17. As it s a benefit do I need to tell the Inland Revenue? No. The scheme is set up so that under the current tax rules you do not have to pay tax on the benefit and therefore you do not have to notify the Inland Revenue. 18. How can I ensure my bike is parked securely at the University? It is important that you use a good cycle lock and that your bike is secured to a fixed object at all times when not in use. The vast majority of cycle thefts are opportunistic, so even if you are only away from your bike for a matter of minutes it is essential that you secure it. There is a wide range of cycle locks available and bike shops can advise you on which are most suitable for you. Cycle safety equipment (listed in the Bicycles+ Guidelines) is included within the Bicycles+ scheme and therefore if you do not already own a suitable lock make sure you include one as part of your hire agreement. The University provides cycle parking facilities across all sites. These generally take the form of Sheffield cycle racks (an upturned U-shaped steel bar) which can accommodate 2 cycles. Secure cycle stores, showers and locker facilities are also provided at a number of locations. For information on where these stores are located and how to arrange access please go to or contact the Transport and Parking Office on Please do make use of the cycle racks and secure cycle stores. Avoid using other street furniture such as lamp posts, pedestrian guardrails and railings as these can create obstructions to pedestrians, particularly wheelchair users. In particular DO NOT attach a bike to railings on ramps or steps as these are provided to assist people with a mobility impairment. The University is continually working to improve the provision of cycle parking facilities. If you have any suggestions or comments with respect to cycle parking provision please contact the Transport and Parking Office. 19. What else is the University doing to assist and encourage staff who cycle to work? The University is working to provide more secure cycle stores, showers and locker facilities. Staff also have access to free cycle training, free Dr Bike sessions, and a business mileage allowance. The Transport and Parking Office works closely with the City of Edinburgh Council and local businesses and organisations to promote and lobby for improvements to cycling infrastructure in Edinburgh. For further information please go to All the background information on Bicycles + is available at For more information please transport@ed.ac.uk or call Transport & Parking Office, Estates & Buildings, 13 Infirmary Street, Edinburgh EH1 1LT Transport and Parking Office, February 2010 Page 7 of 7