Gateshead Council Cycle-Plus Scheme

Transcription

1 Gateshead Council Cycle-Plus Scheme 1. Introduction To promote healthier journeys to work and to reduce environmental pollution, the Government, through the 1999 Finance Act, introduced a tax exemption allowing employers to loan cycles and cyclists safety equipment to employees as a tax-free benefit. The exemption was one of a series of measures introduced under the Government s Green Transport Plan. Gateshead Council has adopted the Cycle-Plus scheme allowing employees to benefit from this exemption through a salary sacrifice arrangement. Salary sacrifice arrangements allow employees to give up the right to receive part of their cash pay under their contract of employment in return for a non-cash benefit. In the Cycle-Plus scheme, the employees receive the cycle and safety equipment free of tax and give up salary on which tax and National Insurance Contributions would be payable. Implementation of the scheme within Gateshead Council will be conducted in partnership with an independent company, P&MM. Applications from employees to participate in the scheme will be accepted during four 4-week windows every year. The registration dates will be publicised internally. Applications will not be accepted outside these dates. The cycle and any additional goods purchased within the scheme, remain the property of Gateshead Council until the hire period ends. At this time, the Council may allow the employee to purchase the cycle and accessories at a fair market value under a separate agreement, although there is no obligation to do so and the Council cannot commit to such an arrangement before or during the hire period. The cycles loaned through the Cycle-Plus Scheme have to be used for work purposes for at least 50% of the cycles overall use. As the cycles are the property of Gateshead Council during the period of the hire agreement, mileage allowance can not be claimed for cycling on business journeys. 2. Eligibility To take advantage of the scheme applicants must be employed by Gateshead Council. To be eligible for the tax and NI exemption the following conditions need to be met: Ownership of the equipment is not transferred to the employee during the loan period. Page 1 of 6

2 Employees must use the equipment mainly for qualifying journeys i.e. for journeys made between the employee s home and work place, or for journeys between one workplace and another. The offer of the use of a loaned cycle is available across the whole workforce, with no groups of employees being excluded. This does not necessarily have to be through the Cycle-Plus scheme. The scheme allows for leisure use of the equipment at weekends, during holiday periods and at lunch breaks. However, the cycle obtained through the scheme has to be used for work purposes for at least 50% of its use. An adult must act as guarantor in respect of applicants under 18 years old. 3. Savings Full details of the savings that employees can make can be accessed in the How to Apply Cycle-Plus document and details are also available on the salary-plus website. The maximum that can be spent on the cycle package is 1000 inclusive of VAT, as advised by the Office of Fair Trading (OFT) consumer credit license. The amount of salary sacrificed by the employee will be equal to the cost of the purchase exclusive of VAT. If at the end of the sacrifice period the employee is given the option to purchase the cycle and equipment then any charge made will be liable to VAT. 4. Items Available Within the Scheme Eligible equipment includes cycles and cyclists safety equipment. Cycle is defined as a bicycle, a tricycle, or a cycle having four or more wheels, not being in any case a motor vehicle (192(1) of the Road Traffic Act 1988 (c52)). An electrically assisted pedal cycle can be included under the scheme. Cyclists safety equipment covered by the scheme includes: Cycle helmets which conform to European standard EN1078 Bells and bulb horns Lights, including dynamo packs 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 cycle is secured safely Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs Page 2 of 6

3 Reflective clothing along with white front reflectors and spoke reflectors. Children s cycles are not eligible. If employees have any queries regarding what is covered within the scheme, please contact the administrators of the scheme on The Council would strongly advise that, when selecting a cycle, employees also obtain the appropriate safety equipment and ensure that this is used for every trip. 5. Application to join the Scheme The scheme will be administered in partnership with P&MM. Applications can be made online or via the telephone. The employee can choose a suitable cycle (and equipment if they wish) from a participating supplier. A list of participating suppliers can be found at If employees wish to use this scheme they can only obtain cycles from these suppliers and there is no provision for exceeding the maximum value of 1000 including VAT (minimum purchase is 100). Applicants can apply online at or via telephone ( ) or text cycles to Applicants will then be required to complete the registration form. Employees will have to provide personal details (have a copy of the Council s payslip to hand) and also specify the chosen value of the cycle and cycling equipment that has been selected. For ICT security reasons, applicants can only access this web address from the Civic Centre or Gateshead Libraries PCs. When the registration is completed, employees must print off the hire agreement and complete the following: Pre-contract document The employee should retain a copy of the pre- contract document for their records Hire Agreement (Copy 1) The employee should retain for their records Hire Agreement (Copy 2 and 3) The employee should sign both of these copies and get their line manager to authorise them. The copies should then be forward to the Cycle-Plus Scheme, Human Resources Department at the Civic Centre, where the employee s details will be checked. If the initial registration was made by telephone, the relevant forms will be posted to the employee s home address. Page 3 of 6

4 Once the relevant checks have been completed and approval has been granted, the employee will receive a Letter of Collection (LoC) from P&MM via first class post. The letter of collection will not be forwarded to the employee until the current application period has closed. This will enable the employee to collect the cycle and accessories from the relevant outlet. The Payroll department will then make the necessary reduction in the employee s salary; these will start as soon as the Letter of Collection has been dispatched. The employee will not pay Income Tax or National Insurance on this reduction in their salary. Under the terms of the scheme it is not possible for participants to cancel the agreement. Employees are therefore committed to making the salary sacrifice for the duration of the loan period. Applicants should be sure of their choice of cycle and the commitment they will be making. It is also important to ensure that the correct value of the letter of collection is chosen as no reimbursement will be made. Employees may only enter into one Cycle-Plus hire agreement at a time, so it is important to ensure that everything needed is included when registering for the Letter of Collection. Once the hire agreement has expired employees may enter into a further agreement. 6. Employee s Responsibilities Each individual is responsible for maintaining the cycle during its hire period, based on the terms of the hire agreement. Should the cycle or equipment hired under the terms of the agreement be lost, suffer accidental damage or become inoperable, employees will be required to continue to meet their financial responsibilities for the remainder of the hire period. Any replacement cycles or equipment will fall outside the terms of this Hire Agreement. Employees have to insure the cycle and goods fitted to the bike, to safeguard against the losses following theft. Most domestic household insurance policies can be extended to cover bicycles if the cover is not already automatically provided. You may be required to let your insurers know that your employer has an interest in the cycle. There are also specialist insurers, details of some of these can be found on the website If the cycle is not used for work purposes for at least 50% of the cycle s overall use it will not be covered by the tax exemption. In these circumstances the Council would then declare the cycle to HM Revenue and Customs ( HMRC ) as a benefit in kind, which will mean that the employee will be liable to tax and the Council to Class 1A National Insurance Contributions. Should employment with the Council cease, for any reason, whilst they are participating in the scheme, employees will be required to pay compensation Page 4 of 6

5 of an amount equal to the remaining costs not offset under the salary sacrifice arrangement ie the compensation will be paid without the tax and NI saving. Where possible, the compensation will be taken from the employee s remaining net pay. If the Council wishes to dispose of the bike the Council may do this under a separate agreement. The Council strongly advises that those taking up the scheme take part in adult cycle training. Further details can be found in section 10 of this document. 7. Maternity Leave During ordinary maternity leave and additional maternity leave, an employee is entitled to continue receiving the non-cash benefits she was entitled to in the period before the maternity leave. This entitlement continues to apply even though the employee may not be receiving any salary that can be sacrificed. 8. Reduced pay due to absence or unpaid leave If as a result of absence, for whatever reason, an employee s pay ceases or is reduced to a level below the sacrificed amount, the term of the sacrifice agreement will be extended by a corresponding period. Salary reductions in respect of this scheme will also apply to occupational payments in respect of maternity, paternity, adoption and sickness. Statutory payments cannot be sacrificed in any circumstances. 9. Benefits and Pension Arrangements Where a salary sacrifice arrangement is used, the gross pay of the employee is affected, which in turn impacts upon the tax and National Insurance Contributions. As entitlement to some benefits is based on the amount of National Insurance Contributions that are paid, and others on earnings, entering into a salary sacrifice arrangement may affect an employee s current or future entitlement to a range of benefits. If employees contribute to the Local Government Pension Scheme, or are part of the Teachers Pension Scheme, their pension will not be affected, as the gross salary, before salary sacrifice, is the amount that is deemed pensionable. Current advice from HMRC suggests that employees can still apply for Child Tax Credit whilst being in a salary sacrifice arrangement. For more information, please check with the HMRC advice line Page 5 of 6

6 Although the vast majority of employees will benefit from joining the Cycle to Work scheme, personal circumstances may mean that it is not beneficial for all. This is most likely when on a low income and receiving Working Tax Credit, as the savings made by non-payment of tax and NI on the bike scheme may be cancelled out by a reduction in the tax credit. Please seek advice from the HMRC Tax Credit help line on Cycle Pool The Council operates a cycle pool for the loan of bicycles and equipment to employees for work purposes. If you are interested in using the cycle pool please contact the Traffic Management Team on Essential Car Users and Lease Car Holders Those that are in receipt of a lease car are reminded that participants in the lease car scheme are required to have the leased car at their disposal for official business at all times. Essential Car Users are reminded that the duties of their post are of such a nature that it is essential for them to have a car at their disposal whenever required. 12. Other useful information For those interested in cycling the Gateshead Council Bike User Group (BUG) has a page on the Intranet under What s New. BUG is a group of Council employees who wish to encourage and support other employees wanting to use a bike to get to work or whilst at work. There are regular BUG meetings and events which can be found listed on these pages. To ensure that new and existing cyclists have the necessary road skills BUG arranges cycling safety sessions on occasion. Safety sessions are useful whether you are a novice, a seasoned cyclist or something in between. The Council's Road Safety Team can also be contacted to provide advice on adult cycle training on The Council has facilities for securing bikes at work at the Civic Centre, details of which can be found on the intranet under Featured Areas, The Travel Plan for Gateshead. Page 6 of 6