How it works with Green Commute Initiative
The Green Commute Initiative (GCI) is authorised by the Financial Conduct Authority to loan cycling equipment without a value limit. If you want to find out more, head over to their website.
It's worth mentioning that the GCI offers an Instant GCI option. With this option your employer doesn't have to register with the GCI, they just have to approve your application. If your employer doesn't have a Cycle to Work partner, it may be worth chatting to them to see if this is an option. You can download the full employer briefing pack here.
Below is a step-by-step guide on exactly how purchasing the FLIT-16 through the GCI works.
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 a 'voucher' for the FLIT-16 from the GCI
On the 1st August 2020, your ebike becomes eligible for the Cycle to Work scheme. At this point, your employer then needs to buy a 'voucher' from the GCI valued at the price of your FLIT-16 (+ accessories) plus the 5% GCI commission.
Here's an example: if you reserved your FLIT-16 by paying a £199 deposit, your employer needs to purchase a voucher for £1,783.95 (£1,699 + 5% GCI commission) from the GCI. This will be higher if you are adding accessories to your order.
Here's another 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 commission) from the GCI. This will be higher if you are adding accessories to your order.
The GCI then uses these funds to buy a FLIT-16 plus accessories from FLIT, and FLIT pays the GCI its 5% commission (please note that we do not benefit from adding the commission to your voucher as this is ultimately paid to the GCI).
3. Receive your refund from FLIT for your deposit
Once we've received payment from the GCI, 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 GCI voucher 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 the GCI, your payment period is typically 12-24 months. During this payment period, the GCI technically owns the bike and you rent it from them.
Using a £1,699 ebike as an example, and taking into account the GCI's 5% commission, you could expect the effective price after tax savings to be:
- £1,213.09 if your maximum income tax rate is 20%, saving you £485.91 (29%)
- £1,034.69 if your maximum income tax rate is 40%, saving you £664.31 (39%)
- £945.49 if your maximum income tax rate is 45%, saving you £753.51 (44%)
What happens after the term agreed?
As mentioned above, you are technically 'hiring' your bike from the GCI by using this scheme. This hiring period is always one year.
At the end of the one year hiring period, HMRC usually requires you to pay Fair Market Value for the ebike (25% of your voucher value). However through the GCI you can avoid this!
The GCI will allow you to loan your ebike from them free of charge for a period of five years.
After the five year period, for a nominal fee (£1) the GCI will appoint you as their agent to dispose of the bike, in practice meaning that it will be yours to do with as you wish.