Stranmillis University College Cycle To Work Scheme Introduction Application Requirements How do I join the scheme?

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1 Stranmillis University College Cycle To Work Scheme Introduction The College is always keen to promote healthy and environmentally friendly forms of transport among the workforce. For this reason it has introduced a Cycle to Work scheme. The Cycle to Work (CTW) scheme is part of a range of initiatives introduced under the Government s Green Transport Plan which allows the College to offer employees the option of hiring an adult bicycle and cycling safety equipment over a 12 month period, free of tax and National Insurance, by way of a Salary Sacrifice. The College strongly recommends that staff applying for CTW scheme include the following safety equipment as part of their Hire Agreement: Helmet (which conform to EU standards) Approved lock or chain Reflective and protective clothing Lights, including dynamo packs By applying to the scheme you could have the use of a new bicycle and safety equipment, up to a value of 1,000, for up to 41% less than the original cost. Application Requirements To be eligible to join the CTW scheme, employees of the College must: Have contracts of employment that outlast the duration of 12 month salary sacrifice period Have a minimum of six months service with the College Be 18 years old or over 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. How do I join the scheme? The scheme will be open for staff to join at any time during the year. If a staff member chooses to join the scheme the College will provide him/her with a bicycle and bicycle safety equipment (if required) on loan in return for the staff member agreeing to nominate a specified amount of salary to be deducted for a 12 month hire

2 period. This nominated amount will not be subject to Tax or National Insurance deductions. The procedure is as follows see flowchart at Appendix 1: Step 1 Read through the Cycle to Work scheme information including the Frequently Asked Questions (Appendix 2) to become familiarized with the terms and conditions of the Hire Agreement. Step 2 Visit the selected cycle retailer(s) and choose the bicycle and equipment needed - up to a value of 1,000 including VAT. Proof of Employment with Stranmillis University College is required - this is a Confirmation of Employment letter on Stranmillis headed paper obtained from the Payroll Officer and one recent payslip. Step 3 The cycle retailer sends a quotation for the selected cycle and equipment to the Finance Department at the College for processing. Once processed, the College will both the cycle retailer and the employee with the outcome of the application. Step 4 If approved, the staff member arranges to meet the Finance Manager to sign a Hire Agreement which highlights the salary sacrifice payments. The cycle and equipment can then be collected by the employee from the retailer. Step 5 Salary sacrifice repayments will commence from the next available pay date after the Hire Agreement has been signed. Stranmillis University College - Approved Cycle Retailers: McConvey Cycles 183 Ormeau Road, Belfast, BT7 1SQ Dave Kane Cycles 309 & 263 Upper Newtownards Road, Belfast, BT4 3JF Chain Reaction Cycles via Chain Reaction branches or online

3 What Savings can I Expect to Make? A bicycle and associated safety equipment up to the value or 1,000 including VAT can be selected. Savings are made by employees because the scheme operates by way of a Salary Sacrifice scheme. Under this scheme an employee agrees to give up part of their salary - equivalent to the purchase price of the bicycle and associated equipment - for an agreed 12 month period, in exchange for some kind of non-cash benefit. In this case the benefit is the loan of the selected bicycle and safety equipment. For equipment costing e.g. 780 including VAT an amount of 65 will be deducted each month for 12 months for monthly paid staff or 15 will be deducted each week for 52 weeks for weekly paid staff. The agreed salary sacrifice amount is taken from the employee s salary each month/week from the gross salary and tax and national insurance deductions are calculated on the amount after this deduction has been made. Thus the employee saves tax and National Insurance contributions on the salary sacrifice amount. The savings achieved will be based on your individual circumstances and actual level of income however: Tax saved will generally be 20% (or 40% for higher rate tax payers). National Insurance savings will be 11% for most employees (or 1% for higher rate taxpayers). In the example above, the saving on a 780 cycle purchase for a 20% tax payer would be (31%) and for a 40% taxpayer (41%). Cycle To Work Scheme Conditions The bicycle and associated equipment remain the property of the College until the end of the 12 month hire period, when the College will seek to dispose of it at a fair market value. However A staff member must make sure that the cycle is insured against theft, loss or damage after signing the hire agreement. The employee should advise their insurer that their employer has an interest in the cycle under a CTW scheme whilst the hire agreement is in place. Replacement equipment is not available under the scheme. If the equipment is lost, stolen or damaged, the staff member still must continue to pay the remaining payments over the term of the hire period.

4 The staff member must not hire out, transfer or otherwise dispose of the bicycle and equipment. The staff member must not make alterations to the equipment during the hire period. As the Cycle to Work scheme is subject to a Hire Agreement, the employee does not have legal ownership of the equipment. If a staff member ceases employment with the College before the end of the hire period, the outstanding balance will be deducted from the employee s final net salary payment meaning that any Tax and National Insurance saving on any outstanding balance may be lost. For Further Information: Contact: Deputy Finance Manager Tel: or corporate@stran.ac.uk Updated March 2014

5 Appendix 1 STRANMILLIS COLLEGE CYCLE TO WORK SCHEME FLOWCHART Employee selects goods from one of participating cycle shops Employee obtains a quotation which is also ed by the retailer to Stranmillis Quotation is received by Stranmillis and processed If approved, a Hire Agreement is drafted and sent out to the employee. Employee signs Hire Agreement and returns to the Finance Manager at Stranmillis. A copy is forwarded to payroll to commence the salary sacrifice payments Stranmillis the cycle retailer with confirmation of acceptance of the employee onto the scheme Retailer prepares the employees order and contacts the staff member when ready for collection Staff member collects cycling equipment and both the retailer and employee sign off the receipt of the goods. Retailer invoices Stranmillis attaching the goods received documentation Stranmillis make payment to the supplier

6 Appendix 2 Frequently Asked Questions How does CTW scheme work? The College will provide you with the use of a bicycle and safety equipment, in the form of a hire, for commuting and work related activities. As long as you use the bike mainly for work related cycling then you will be able to benefit from the scheme. Each participating member will save on Income Tax and National Insurance Contributions that would otherwise have been payable. As a participating employee you will agree to a salary sacrifice which will result in a regular sum being deducted from your gross pay. What happens to the bike and equipment after the hire period is completed? At the end of the 12 month hire period, the College may seek to dispose of the bicycle and safety equipment at rates set by Her Majesty s Revenue and Customs as follows: Acceptable disposal value % Age of cycle Original price of the cycle less than 500 Original price of the cycle more than months 18% 25% Can I get a bike for a family member, partner, friend etc.? No, the bike and equipment must be used by you, mainly for commuting to work or work related activities. Can I apply for more than one bike? Yes, providing you use both for commuting to work e.g. you may have a summer and a winter route to work, both requiring different demands from a bike. Please note that the maximum that can be spent on all bicycles and equipment is 1,000 (including VAT). 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. Bikes can be covered by your household contents 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". Some insurance companies can cover you in case of loss of or damage to cycle and accessories in an accident, theft of cycle and accessories (but not theft of accessories alone) and malicious damage. Some provide third party liability cover, legal aid and personal accident cover.