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Ten years of Cycle2Work


The 1999 Finance Act contained clauses that allowed employers nationwide to loan cycles to employees as a tax-free benefit. Ten years on, several companies are offering cheaper cycling to the masses.

from BikeBiz

As part of the Government’s initiatives to promote healthier living and reduce pollution, the 1999 Finance Act introduced tax exemption to those buying bicycles for the purpose of cycling to and from work. The scheme works by encouraging employers to get their workforce cycling, offering tax-free bicycle purchases to employees interested in a healthier means of travelling to work.

Salary sacrifice arrangements are commonly used, where the employee repays the employer over time. Employers of all sizes and sectors can use the scheme.
Debates have raged about whether or not the scheme benefits smaller retailers, with the main pro point being increased sales volume driven by third party brands. But many others suggest that the commission taken by third party facilitators slashes margins.

Although not common knowledge, e-bicycles and tricycles can also be obtained tax-free, as can safety and security product, including lights, bells, helmets, mirrors, reflective clothing, locks and mudguards.

The only major limitations to the scheme have been put in place by the Office of Fair Trading, advising: “The group consumer credit licence will cover schemes up to £1,000.”

Perhaps the biggest player in the market, Cyclescheme reaches 8,500 employers and 1,338 retailers in the UK, on average gaining new clients at the rate of around 50 per day. It is projected that over 1,500 IBDs will work with Cyclescheme by year end.

Working with organisations like the Greater Manchester Police, Sellafield and Asda, the business is going from strength-to-strength recording ten-fold growth in the firm’s second year over the first, slowing to a four-fold growth in year three. This year, MD Richard Grigsby expects to have doubled last year’s turnover, having achieved it month-on-month to date.

“There seems no reason to expect a slow-down as most schemes are repeating and we are seeing many new clients join us daily,” says Grigsby.

“After moving into a three floor Georgian building when we had just seven staff, we’re now looking for larger premises for 23 staff.”

The firm has also made solid investment in extranet software allowing the company to grow organically. Approving and payment for vouchers is now largely automated and the system also allows instant viewing of live applications 24/7.

Grigsby says of the future of Cyclescheme: “None of us would be so churlish as to assume that C2W will continue because ‘it’s such a great scheme’. The risk of having to wind up our business at the whim of a Government decision is omnipresent and a constant reminder of the frailties of our business. To put this into perspective I have met the man who axed the Home Computer Initiative so I am under no illusions over the potential risks of persistent scheme abuse.”

Grigsby shared some interesting statistics with BikeBiz, revealing that an average voucher is worth £600, with 15 per cent of that going toward safety equipment. So most purchases are going on reasonably specced bikes, but not ‘dream racers’, suggesting that Cyclescheme is genuinely drawing new faces to cycling. In fact, survey responses show that 50 per cent of customers are entirely new to cycle commuting and Cyclescheme doesn’t shift small numbers...
Cyclescheme: 01225 448933