In early July great swathes of Yorkshire turned yellow and over 2,500,000 people took to the streets and hills as the Tour De France became Le Tour De Yorkshire and cycling fever gripped God’s Own County.
It gripped me sufficiently to dig my bike out of the back of the garage where it had lain unused for five years. Sadly what I remembered as a gleaming and sleek machine turned out to be a rusty wreck with two flat tyres!
A quick ring around the local cycle workshops confirmed that several other people had undergone a similar experience, as they all quoted me a turnaround period of several weeks to make it roadworthy again.
So that’s how I found myself in the cycle showroom earlier today, handing over my hard earned cash for a shiny new machine which promised to eat up the miles and glide effortlessly up those Yorkshire hills.
Then the salesman asked “are you purchasing this under the HMRC approved Cycle to Work Scheme” and my mind turned to the tax savings offered to both employer and employee by this underused opportunity.
The scheme basically works as follows:
The tax saving to the employee is that the sum payable under the salary sacrifice arrangement does not attract income tax and National Insurance contributions, thus saving a basic rate taxpayer around 32% as compared to buying the bike out of taxed income.
The saving to the employer is employers NIC on the salary sacrifice at 13.8% and capital allowances (potentially at 100%) on the cost of the bike.
So both the employee and the employer are winners and can happily wear the “Maillot Jaune”
Andrew Mitchell, Partner, Skipton