Cycle to Work Scheme
How the scheme works
Joining the Green Commute Initiative is easy and straight-forward. We have produced a step-by-step guide to show you how the scheme works, and what you and your employees can expect at each stage.
- Essentially your employee hires the bike through Green Commute Initiative. Why hire and not buy? These are the rules set by HMRC which all cycle-to-work schemes work to. GCI is also authorised and regulated by the Financial Conduct Authority. It’s because of this that GCI can offer bikes over the traditional £1,000 limit. At the end of the scheme, ownership can pass to the employee.
- Once your employee has chosen their bike hire package, they will get a quote from one of our registered bike shops, complete a form on our website and present you with a proforma invoice. The invoice is for the cost of a GCI voucher covering the cost of the bike hire package. So, you actually buy a voucher from us, not a bike. Why a voucher? This is another HMRC scheme rule.
- Now the rest of the paperwork needs to be completed. Firstly, we need to deal with how the voucher will be paid for. There are two financial mechanisms you can use to acquire the GCI vouchers:
- Pay-as-you-go option
You can pay for the vouchers immediately and then we’ll release the bikes to your employees. It means there might be a slight delay in your employees getting their bikes but if you pay the invoice quickly, this can be minimal and there is no cost to you. See the Employee Instant Information Flyer.
- Financed option
You can finance the whole scheme with a third party so there is no impact on your cash flow. There is a charge of 8% but this is more than covered by the 13.8% employer’s NI savings you’ll make, so you’ll still save almost 6% and there’s no effect on your cash flow.
- Pay-as-you-go option
- Once the voucher has been paid for, you’ll want to know how to get your money back from the employee. It’s quite simple really, they accept a new rewards package where they give up or sacrifice part of their cash salary in exchange for the non-cash benefit of the bike. Hence the term ‘salary sacrifice’. The salary sacrifice arrangement is between you, the employer, and the employee, and is independent of the hire period they will have with GCI. As their employer you can choose a how long the repayment period will be for however it must be for at least 12 months; we suggest that you discuss this with your employee so its agreeable to you both.
- Green Commute Initiative provides an HMRC compliant Salary Sacrifice Agreement and also the Hire Agreement. We use state-of-the-art electronic document signing so there is no need for time consuming paper documents.
- Once the agreements are e-signed and payment has been made, we’ll also send you a receipt and instructions on how to handle the VAT element.
- All that remains now is for GCI to send the employee the voucher to take to the bike shop to claim their bike package and start cycling to work, reaping all the benefits it will bring to their lives.
- GCI manages all the end of scheme arrangements directly with the employee. So apart from setting up the salary reduction there’s nothing else for the employer to do.
For small to medium sized companies with less than 1,000 employees, or where you feel the take-up will be limited, we would recommend you use our Instant GCI scheme which is our pay-as-you-go option.
For large organisations with more than 1,000 employees, why not consider registering to become a corporate client and join Corporate GCI. Please contact us for more information.
Please visit our Frequently Asked Questions to answer any queries you may have.