Liability & Financial Risks for Cycle To Work Scheme
Are you looking to add a cycle to work scheme as an employee benefit? The demand is certainly there:
- - Up to half of your workforce wants to commute by bike
- - The average person in England cycles 47 miles a year
Despite the interest in taking to the saddle, the UK has one of the lowest levels of bike ownership in Europe. However, one of the biggest incentives for employees to commute to work by bike is if employers contribute towards the cost of a bicycle.
This brings us to Cyclescheme. As the UK's leading cycle to work scheme, it's helped more than one million employees save on travel costs whilst switching to a healthier commute.
Available to any business of any size, Cyclescheme lets employees save up to 42% on a new bike (including electric bikes, mountain bikes, and cycling accessories) from a wide range of leading cycle shops, whilst spreading the cost across interest free monthly payments.
Plus, it can save businesses money on income tax and national insurance contributions. So, it's no surprise that Cyclescheme is one of our most popular employee benefits.
To help you make an informed decision before adding it to your employee benefits package, this blog explains the financial risks and liability associated with cycle schemes.
Can you really save money with a cycle to work scheme?
The short answer is yes! Here's how. Cyclescheme is a salary sacrifice employee benefit, which means that employees give up some of their salary in exchange for the benefit.
As the money is taken before tax, the employee will pay less income tax and national insurance and the employer can save up to 13.8% on Employer national insurance contributions through salary sacrifice payments.
On top of the tax benefit, Cyclescheme is a completely free of charge service to employers and their employees with no administrative costs. To avoid employer tax liability, employees must pay an ownership fee lump payment at the end of the hire period, which also transfers ownership of the bike from the employer to the employee.
How can employers fund the cycle to work scheme?
If you're curious about how to fund the cost of implementing a cycle to work scheme to encourage active travel, you'll be interested to know that Cyclescheme offers the following three options:
- Upfront payment: This standard option involves employees applying for a bike and equipment and Cyclescheme invoicing the employer for the full amount
- Financing: If you'd prefer not to impact your cash flow, a fixed-term commercial loan is available with no fee to the employer and modest interest to be covered by the employee
- Release before payment: For some larger companies (20,000+ employees) it's possible for eCertificates to be released before payment under agreed payment terms.
What happens if an employee leaves or is made redundant during the hire period?
After employees have collected their bikes and equipment from the 2,600+ UK bike retailers associated with Cyclescheme, there is a cooling-off period of 14 working days.
After that, the hire agreement is non-cancellable, which means that if an employee leaves or is made redundant during the hire period, they must pay the outstanding amount in full from their final net salary (e.g. without tax exemptions).
What happens if an employee’s bike is stolen?
Sadly, 66,960 bikes were stolen in the UK in 2023/24. In other words, a bike is taken every single minute.
Cyclescheme includes 14 days of free insurance, which covers theft, but after that, we recommend that employees insure their bikes.
If a stolen bike is replaced (and continues to be used for commuting) employers can continue to take the salary sacrifice reductions from the employee’s gross salary. If a stolen bike isn’t replaced, any outstanding salary sacrifice repayments will be taken from the employee’s net pay.
If an employee’s bike is stolen, they should email the following information to info@cyclescheme.co.uk:
- - Date of the theft
- - The police station reported to
- - Crime Reference number
- - Is the bike insured?
- - Has the employee’s employer been notified?
Are any outstanding Salary Sacrifice reductions being taken from Net salary?
Who is liable if an employee has an accident when cycling to work?
Although employers have a duty of care towards employees whilst they're at work, this doesn't apply to the commute to and from work.
As Cyclescheme is designed for commuting, this means an employer is not liable should an employee have an accident whilst cycling to or from work.
Depending on the nature of the accident, the liability could lie with the bike manufacturer (if there is a defect), the highway authority (if the cyclist hit a pothole), or another commuter (if there was a collision).
If, however, employees cycle as part of their job, such as to get to client meetings or to make work-related deliveries, their employer could be liable if an accident occurs.
As for bike maintenance, that is the responsibility of the employee. For peace of mind, encourage employees to wear safety equipment and join a cycling organisation that provides legal cover and advice. Plus, Cyclescheme’s 14-day free insurance covers accidental damage, theft, clothing, headgear, and accessories.
Why is Cyclescheme the trusted choice?
As the UK's leading cycle to work scheme operator, Cyclescheme works with more than 2,600 bike shops, so employees can receive tax breaks on commuter bikes and accessories in-store and online.
In addition to adhering to HMRC and Department for Transport (DfT) Cycle to Work guidelines, Cyclescheme was awarded supplier status under the ESPO Framework, which means public sector employers can work with Cyclescheme with the need to tender, saving time and money.
To discover more about making Cyclescheme your cycle to work scheme provider, get in touch via our contact page or request a demo.
Frequently Asked Questions
Will a cycle to work scheme encourage my employees to commute by bike? +
Yes. One study found that having a cycle to work scheme was the second most popular incentive to motivate staff to ride a bike to work. The number one incentive (apart from living near the workplace) was having a better cycling infrastructure.
Are there any other employer benefits of a cycle to work scheme? +
Yes. As well as Employer NIC savings, joining the scheme as an employer actively supports your Environmental, Social and Governance (ESG), and Corporate Social Responsibility (CSR) goals.
How simple is it for my business to set up and manage Cyclescheme? +
Setting up Cyclescheme is straightforward, taking approximately five minutes. The platform is intuitive and easy to manage, with fuss-free ownership management handled by Cyclescheme, reducing administrative burdens for employers.
Are there financing options available to help my business implement Cyclescheme? +
Yes, Cyclescheme offers financing options to help employers fund their program, ensuring that businesses of all sizes can provide this benefit to their employees without impacting cash flow.
Can Cyclescheme be customised to fit my company's specific needs? +
Yes, Cyclescheme offers flexibility to align with your company's requirements, including setting spending caps and choosing preferred retailers.
What are the employee benefits of cycling to work? +
Numerous studies have highlighted the positive effects of cycling. Those who cycle to work take 4.5 fewer sick days, have a lower risk of mortality, hospitalisation, cardiovascular diseases, and cancer, and are less likely to need medication for mental health issues.
Does cycling to work support environmental sustainability? +
Yes. Encouraging employees to commute by bike, with a cycle to work scheme such as Cyclescheme, helps reduce carbon emissions and traffic congestion, contributing to a greener environment.
How does Cyclescheme enhance my company's benefits package? +
Offering Cyclescheme demonstrates a commitment to employee wellbeing and environmental responsibility, making your benefits package more attractive to current and prospective employees.
How can I calculate how much my business can save with Cyclescheme? +
Building a business case for a new employee benefit can be challenging, but with Cyclescheme, the benefits are clear - for both employees and employers.
Employees save up to 42% on a new bike and accessories while spreading the cost through salary sacrifice, making cycling to work more affordable. Meanwhile, employers save up to 13.8% in National Insurance Contributions (NICs) for every employee who joins the scheme. In real terms, that’s a £138 saving for every £1,000 processed through the scheme, while still fully recovering the initial cost of the bike.
Beyond financial gains, Cyclescheme helps businesses create a healthier, happier, and more productive workforce. To see exactly what your company could save, use the Cycle to Work Benefits Calculator to estimate your business's potential savings, CO2 reductions, and health benefits for your employees.
How can my business encourage employees to take advantage of a cycle to work scheme? +
Here are three ways in which your business can boost engagement and create a healthier, more engaged workforce:
- Raise awareness: Communicate the benefits through emails, posters, and internal newsletters. Highlight tax savings, fitness perks, and reduced commuting costs
- Host a launch event: Organise a bike-to-work day or invite a cycling expert to discuss how employees can get started
- Make it easy: Simplify sign-ups with clear step-by-step guides and HR support
As an employer, how can I help reduce bicycle theft? +
Start by providing secure bike storage, such as lockable cycle shelters, CCTV-monitored racks, or indoor bike rooms. A well-lit, designated parking area deters thieves and reassures employees.
Employers can save on bike accessories with Cyclescheme, so encourage them to purchase high-quality D-locks or security-approved locks through the salary sacrifice scheme. You could also run bike security workshops, partnering with local police or cycling organisations to educate employees on theft prevention.
