How it works with CycleScheme
Recent change of rules (and removal of £1,000 limit!)
Previously, your employer would technically own the bike, and you would hire it from them over the course of your Cyclescheme repayment period. You could do this because the Financial Conduct Authority (FCA) allowed employees to loan cycling equipment worth up to £1,000 from their employer.
Since the rule change, Cyclescheme now have their own FCA Authorisation. This means that you now hire the bike directly from Cyclescheme, instead of your employer.
You can read all about the changes here.
1. Reserve your FLIT-16 (if you haven't already!)
If you haven't already, reserve your FLIT-16 by paying a £199 deposit: https://flit.bike/product/flit-16-folding-ebike-deposit/. This is refunded at the point that your Cycle to Work application has been approved and processed.
If you have paid the full amount upfront, this also acts as a deposit and is refunded at the same time
2. Your employer buys your FLIT-16 through Cyclescheme
On the 1st August 2020, your ebike becomes eligible for the Cycle to Work scheme. At this point, you need to apply for a Cyclescheme certificate to the value of your FLIT-16 (+ accessories) plus the 12.5% Cyclescheme commission.
Here's an example: if you reserved your FLIT-16 by paying a £199 deposit, you need to apply for £1,911.38 (£1,699 + 12.5% Cyclescheme commission). This will be higher if you are adding accessories to your order.
Here's another example: if you reserved your FLIT-16 by paying £1,500 during our Kickstarter campaign, you need to apply for £1,697.50 (£1,500 + 12.5% Cyclescheme commission). This will be higher if you are adding accessories to your order.
Your employer and Cyclescheme will then review your application and pay us the value of your certificate. In turn, we pay Cyclescheme their commission (please note that we do not benefit from adding the commission to your certificate as this is ultimately paid to Cyclescheme).
3. Receive your refund from FLIT for your deposit
Once we've received payment from your employer, we'll refund the original amount you paid during our pre-order campaign.
4. Start your monthly repayments (TAX FREE!)
Here's when you start saving!
Once your Cyclescheme certificate has been processed, you'll start making monthly payments to your employer. These payments are deducted from your salary before tax, which is why this is known as a salary sacrifice scheme.
With Cyclescheme, your payment period is between one and four years, with bigger savings for longer agreements. During this payment period, Cyclescheme technically owns the bike and you rent it from them.
Using a £1,699 ebike on a 4 year payment period as an example, and taking into account Cyclescheme's 12.5% commission, you could expect the effective price after tax savings to be:
- £1,299.74 if your maximum income tax rate is 20%, saving you £399.27 (24%)
- £1,108.60 if your maximum income tax rate is 40%, saving you £590.40 (35%)
- £1,013.03 if your maximum income tax rate is 45%, saving you £685.97 (40%)
What happens after the rental period?
At the end of your payment period Cyclescheme will get in touch with you to discuss your options. You have three to choose from:
1. Own it later -
You pay a refundable deposit (7% of your certificate value) and continue to use the bike with no further payments until you've had it for a total of 4 years. After this period, no further action or payment is required if you wish to keep your FLIT-16 - Cyclescheme simply retains your deposit and transfers ownership of the bike to you. If you do not wish to keep your FLIT-16 then you return it to Cyclescheme at your own cost and they will refund your deposit.
2. Own it now -
Take ownership of your FLIT-16 at the end of your payment period by paying Cyclescheme the market value (e.g. for a one year payment period this would be 25% of your certificate value, for a four year payment period this would be 7% of your certificate value). These market values are set by HMRC.
3. Return -
Return your FLIT-16 to Cyclescheme at your own cost and pay no ownership fee.