Improve employee wellbeing and save on National Insurance contributions
What is Cycle to Work?
Cycle to Work allows employees to save money on bikes and cycling equipment from Halfords and a network of participating retailers, encouraging a healthier commute.
How does it work?
Note: If an employee applies to the scheme, the salary adjustment takes the form of a salary sacrifice. Monthly repayments come out of their gross pay, resulting in tax and NI savings for them, and NI savings for the employer too.
Choose: You can choose when to open and close application windows to best suit your business. We recommend setting aside 3 - 4 weeks to set up the benefit, and giving employees the ability to apply all year round (i.e. rolling windows) to maximise engagement and choice.
Note: As Halfords are the Hirer, they own the bike from the start. This means there is no transfer of ownership at the end of the Hire Agreement. This is a simplified process developed by Halfords to ensure the end of hire is managed in a HMRC compliant and secure way. This removes the administration burden from clients.
Note: You can set up Cycle to Work on Pre-Approval, for reduced admin. With Pre-Approval, the system processes applications automatically, based on eligibility data supplied before opening a window. If you want full control over the process, you can choose Post-Approval instead, and approve, reject and amend requests manually after each window.
Note: Cycle to Work is part of SmartPay™, our salary sacrifice and payroll benefits administration portal. With SmartPay™ you can manage all Reward Gateway salary sacrifice and payroll benefits in one place, and download the reports you need to process salary deductions.
Things to consider when setting up Cycle to Work
At what times of the year will you give employees the ability to apply?
- Should employees be able to apply all year round?
- If not, how many windows will you run, and what will the dates be?
How would you like to manage allowances and repayments?
- You can set different monetary limits for a Letter of Collection per individual. This is especially useful for employees on lower band salaries, as repayments may take them below Minimum Wage
- How many months would you like to spread monthly repayments over? (12, 18, 24 months)
How would you like to process applications?
- Pre-approval - you will need to supply additional information in your eligibility file to allow our system to perform eligibility checks.
- Post-approval - an administrator will need to manually review applications.
How would you like to pay for the orders placed during each window?
- We recommend setting up a Direct Debit, so payments to RG are automated, and we can dispatch Letters of Collection instantly
How many payrolls are there in your business? For each we will need:
- Name (e.g. Monthly) - required to assign users to the correct payrolls
- Frequency (monthly, weekly, fortnightly)
- First Pay Day to set up in the system (i.e. date employees are paid)
- First Cut-off Date (i.e. date the first deduction report will be available)
- Approver - one or more users to manage applications in each payroll
How would you like to process applications?
- Pre-approval - you must supply additional information in your eligibility file for our system to perform eligibility checks. If you have Direct Debit set up with Reward Gateway, employees will be able to receive their voucher instantly after placing their order.
- Post-approval - an administrator must manually review applications. If you have Direct Debit set up, employees will receive their vouchers instantly after approval. Otherwise, vouchers will be dispatched when we receive payment for the window’s orders.
How would you like to pay for the orders placed during each window?
- Would you like us to bill you weekly or monthly?
- Do you have any special payment terms? For example, do you clear invoices within a set period of time after receiving them?
- We recommend setting up Direct Debit to automate payments to Reward Gateway and allow us to dispatch vouchers instantly (on pre-approval).
- If you choose not to set up Direct Debit, we will invoice you at the end of each window and dispatch all vouchers after receiving payment.
Who will manage your Cycle to Work programme on SmartPay™?
- Master Approver - can access payroll information, application details and product configuration settings for all benefits set up on SmartPay™
- Payroll Approver - can access all payrolls set up on SmartPay™
- Product Approver - can manage Cycle to Work configuration settings
If a bike costs more than the value of a letter of collection, can employees top up with their own money?
No, this is not possible. It is important that employees choose a bike that costs the same as the value of the letter of collection they have purchased. Furthermore, there are limited options for cancelling a letter of collection and, in many cases, employees will not be able to cancel their letter of collection. For more information, see Halfords' terms and conditions.
How do changes to National Insurance and income tax impact Cycle to Work applications?
For existing Cycle to Work applications, the repayment amounts/gross deductions stay the same for the entire repayment period with calculations based on the rates at the time of the application submission. This is because the employee 'signs' the agreement at this point and we can't apply changes until the contract ends.
For new applications, Halfords will update any repayment amounts being offered to employees and the Reward Gateway team will update our application pages to mirror any changes from Halfords. Any bespoke descriptions of the gross savings amounts, written by clients themselves on tiles/pages, must be updated by the client.
Additional information for your eligibility file:
- Payroll name - required for each employee (if more than one payroll)
- Date of birth - required on Pre-Approval
- Annual gross salary - required on Pre-Approval
- Weekly hours worked - optional on Pre-approval (system default is 40)
- Weeks worked per year - optional on Pre-approval (system default is 52)
- Other gross salary deductions
- SmartPay™ Limit - optional, if you are setting a maximum allowance for the total amount of each employee’s RG benefit applications
- Cycle to Work Limit - optional, if you are setting a maximum allowance for each employee’s Cycle to Work applications