How it works with Green Commute Initiative
Since the change to the law about the spend limit for Cycle to Work, the main difference between each of the three providers is just the options that you are given after the 'rental period' with the bike.
The GCI are authorised and approved by the Financial Conduct Authority, which means that they can loan cycling equipment without a spend limit. If you want to find out more, head over to their website at https://greencommuteinitiative.uk/
Below is a step-by-step guide on how it all works with the FLIT-16.
1. Pre-order your FLIT-16 (if you haven't already!)
If you haven't already, pre-order your FLIT-16. The amount that you paid effectively acts as a deposit for the ebike.
2. Your employer buys a 'voucher' for the FLIT-16 from the GCI
As soon as the bike is ready for delivery, it becomes eligible for the Cycle to Work Scheme. At this point, your employer then needs to buy a 'voucher' for the FLIT-16 from the Green Commute Initiative (GCI).
Here's an example: if you bought your FLIT-16 for £1,500 on our Kickstarter campaign, your employer needs to purchase a voucher for £1,575 (£1,500 + 5% GCI retail scheme fee) from the GCI.
The GCI then uses these funds to buy a FLIT-16 from FLIT, and FLIT pays the GCI its retailer scheme fee (£75).
3. Receive your refund from FLIT for your deposit
FLIT then refunds your deposit.
4. Start saving through TAX FREE monthly payments for your ebike
You then repay your employer for the FLIT-16 through what is known as salary sacrifice scheme - i.e. the monthly payments are deducted from your salary before tax.
This saves you 32% (£480), 42% (£630) or 47% (£705) on the total cost (assumed to be £1,500 in this example) depending on your income tax bracket. Including the 5% (£75) GCI retail scheme fee used in this example, this gives a net saving of 27% (£405), 37% (£555) or 42% (£630).
You can choose a monthly repayment plan to suit you - either repaying the total amount over a 12, 18 or 24 month period. Have a chat with your employer to agree a term that suits you.
What happens after the term agreed?
As mentioned above, in the Cycle to Work scheme you are technically 'hiring' the ebike from your employer. The hiring period for the GCI is always one year.
At the end of one year hiring period, HMRC usually requires you to pay Fair Market Value for the ebike (25% of the current value). However through the GCI you can avoid this!
They will give you a loan (completely free of charge!) to use the ebike for a period of five years.
After the five year period, you can then buy the FLIT-16 from the GCI for a nominal sum of £1 so that you fully own it.