Policy overview
A tax-free bikes-for-work scheme is a Government-led initiative. It supports green travel to work and environmental issues.
The scheme lets employees save money on bikes and equipment through salary sacrifice. They do not pay income tax or National Insurance contributions on the deducted part of their salary.
The benefits of the Cycle2Work scheme, hosted by Perkbox, include:
- reduction of carbon footprint
- saving 32% to 42% of a new bike and safety equipment
- spreading the cost of a new bike and safety equipment over 12 or 18 months
- saving money on income tax and National Insurance contributions
- improving fitness
- a choice from hundreds of brands from UK partner stores
Cycle2Work is governed by HMRC and is open to all employees who:
- are aged 18 or over and have a contract which outlasts the hire agreement
- agree to use the bike or equipment mainly for commuting
- are paid by LCC payroll
- earn over the minimum wage after deductions
- receive an income over the minimum tax threshold
School employees can join if their school has a Direct Service Agreement (formerly buy-back) with us for a payroll service.
If the school's position is unclear, employees should ask the school's finance administrator or email employeebenefits@lincolnshire.gov.uk.
How does the scheme work?
- An employee signs up to a cycle hire agreement via Perkbox benefits platform.
- They choose a cycle and cycle equipment to the value of up to £3,000.
- Instalments are deducted directly from their gross salary, with the option to spread payments across 12 or 18 months.
- At the end of the employees initial hire period (12 or 18 months from the order date), an End of Hire Agreement fee becomes payable. This fee allows the employee to move into a shorter extended hire period and ensures the scheme remains compliant with HMRC rules.
Employee options at the end of the initial hire period
1. Extend the hire (most popular)
- pay the end of hire agreement fee plus VAT via net salary
- extend hire by two years for bikes over £500, or one year for bikes under £500
- ownership transfers automatically at the end of the extended hire at no extra cost
2. Transfer ownership immediately
- pay the end of hire agreement fee plus VAT via net salary
- pay any remaining balance based on HMRC fair market value
- ownership transfers immediately
3. Return the bike
- pay the end of hire agreement fee plus VAT via net salary
- we arrange collection for return and recycling
Employees will directly receive an automated email at the end of their initial hire period (this period starts when order is sent to supplier) to choose which option they would like to take.
Although you may use the bike for leisure, you must mainly use your bike for commuting to and between workplaces. This means that you must use your bike for at least half of your commuting journeys. For example, if you work two days in the office and threedays at home you must use your bike to get to work on average at least one day per week over the year.
Further details
For more information about the application process, visit the Perkbox Benefit Platform or email employeebenefits@lincolnshire.gov.uk.
