The government’s ambition to get cycling as the first mode of transport for shorter journeys, or even as part of a longer commute, was first set out in the Cycling and Walking Investment Strategy in 2017, but they have wanted to push it further, by introducing the Cycle to Work scheme.
What is the goal of the Cycle to Work scheme?
The government’s goal is to increase the amount of active travel; ie. cycling, resulting in substantial benefits to health, environment, and communities. For individuals, it means better health and cheaper travel, and for businesses, it means increased footfall in retail and increased productivity. As for society as a whole, it would result in lower congestion in rush hours, better air quality, and more attractive communities. Illnesses due to inactivity costs the NHS nearly £1 billion a year, with other indirect costs calculated at £8.2 billion.
The Cycle to Work scheme has been implemented to attract new cyclists and designed to be as inclusive as possible so that people commuting to work have to opportunity to see the benefits of cycling. The scheme already has over 40,000 employers involved across the UK and has contributed to assisting over 1.6 million commuters to cycle to work.
This blog will explain the different Cycle to Work schemes using the salary sacrifice process, and how, as an employer, you can encourage cycling to work in your workplace.
What is the salary sacrifice process?
Salary sacrifice is where an employee agrees to give up part of their pre-tax salary in exchange for a benefit from their employer. In the case of the Cycle to Work scheme, it would be in exchange for the hire of a bicycle for the work commute, and all safety equipment required.
How does it work?
A Cycle to Work scheme can benefit both the employee and the employer. If the scheme meets the relevant criteria, it can benefit from a tax exemption, and since a portion of the employee’s salary is gone, the employee pays less tax and National Insurance, and the employer can save on employer NICs at 13.8%. To find out more about the amount that can be saved by both employees and employers, head to GOV.uk.
One other option is to provide a loan to an employee to buy a bike for their work commute. This is similar to employers offering an advance of salary to employees who commute by train for seasonal rail tickets. Loan schemes are subject to regulation by the FCA. The loan needs to meet certain criteria to be exempt from regulation and will depend on the nature and duration of the loan.
The other alternate way is the workplace pool cycle model; in which staff are supported in commuting and also business trip travel. In simplest terms, you can purchase a suitable range of bikes for active travel and make them available for employees, on either a one-to-one or pool basis. Workplace schemes should work on focusing attracting people who currently travel on less sustainable modes, such as cars. Cycles for active travel should be accessible; close to where they are needed, and securely stored.
What are the criteria?
The salary sacrifice arrangement typically lasts a year, and the following conditions must also be met:
The employee must not, during the hire period, own the bicycle
At least 50% of the bicycle’s use must be for commuting to work purposes
The offer of the use of hired cycles must be fully inclusive and be made available for the whole workforce.
How else can you help?
The other ways in which you, as an employer, can help your employees, is by encouraging cycling to work, and leading by example, if possible. Any scheme will only reap the benefits if there are suitable facilities available to support those who choose to commute by cycling. These facilities include secure and safe cycle parking at the place of work, and quality shower and changing facilities for staff too.