Here are some of the common questions that come up for our clients. Please reach out to your Client Success Manager or Client Support if something isn't covered here.

Hire Agreement amount or Letter of Collection needs to be changed

Once a Cycle to Work application has been approved. The Hire Agreement and Letter of Collection cannot be amended. If the member would like to amend the amount, they can do so by cancelling their order (within 14 days) and provided the Letter of Collection has not been spent.

Employee wants to cancel prior to the close date of an application window

The window dates are not linked to application cancellations. For example, the applications can still be pending although the window has closed a week ago, or instantly approved although the window is still open. An employee can cancel their Cycle to Work order within 14 days of receiving their Letter of Collection (providing it hasn't been spent). For more information on refunds, please see the Cycle to Work refund process.

Employee wants to cancel application after the window closes and the Letter of Collection has been issued

Please be aware that Halfords have a 14 day cancellation period. If the employee has received their Letter of Collection and would like to cancel within the initial 14 day cancellation period, they can do so on the Order History page. If the employee would like to cancel their Letter of Collection after the initial 14 day period, they can request this from their employer and provide a reason for the request on the Order History page. Refunds can only be processed if the Letter of Collection has not been spent.

If the scheme is CtW Plus, then Halfords manage the cancellation. The Employee can find details of how to cancel in the same email where they receive their Letter of Collection.

How long is the Letter of Collection valid for?

Halfords have a 4 month expiry on every Letter of Collection. If an employee doesn't spend their Letter of Collection during this time, they cannot get a refund. The employee can request an extension on their Letter of Collection directly from Halfords by calling their Cycle2Work team on 08450 778850 or via email cycle2.work@halfords.co.uk

What happens if the employee leaves or gets made redundant before the end of the hire period?

If the employee leaves before the end of the hire period, they must pay their employer the balance of the amount outstanding. This should be deducted from their final net pay. The employee will no longer be able to benefit from the tax exemption. 

Please note, that this transfer of ownership is the subject of a separate agreement and isn't governed or influenced by the Hire Agreement the employee would have signed for this scheme.

The transfer of ownership still needs to happen and it is up to employers to decide how they would like to do this. Some suggested options are:

• Process Managed Extended Hire. If the scheme is set with this End of Hire option, the employee is still eligible to extend the hire at zero cost at the estimated end of Agreement. The record will appear in the Managed Extended Hire list in SmartPay.
• Take the Fair Market Value (FMV) when taking the final payment. FMV can be calculated using the HMRC Valuation Matrix table.
• P11D Process - The employer can submit a P11D form for the transfer of ownership. To reduce the FMV that this is calculated on, it can be submitted at the estimated end of agreement rather than when the employee left the business. This amount would also need to be reflected on the P60 along with any other salary sacrifice for the employee.

Also, read Considerations for employees applying for RG Cycle to Work

Please note, Reward Gateway does not provide tax advice and the above information is publicly available through the relevant HMRC channels.

More information can be found on the HMRC website and in this HMRC Cycle to Work guidance document.

I want to give the employee the bike

For the employer and the employee to benefit from the tax exemption, the employer must own the bike for the hire period. The ownership of the bike must be transferred via one of the HMRC approved methods (Managed Extended Hire, P11D or Market Value). If the employer was to simply give the bike to the employee, it would be seen as a Benefit in Kind and the tax saving no longer available. 

What happens to salary deduction for CtW during Maternity or Sick Leave?

If an employee is absent from work during the period covered by their Cycle to Work Hire Agreement, their salary reduction will remain in place and will apply to any pay received (including sick pay or maternity pay). For more information, please see What happens to salary deductions during maternity or sick leave.

What happens to our employees in Jersey or Guernsey?

Employees who are based in Jersey or Guernsey are still eligible to apply for Cycle to Work, however they are required to pay a Goods Service Tax at 5% on all goods over the value of £240. 

The Net deduction option - are the net deductions reflected as such in the payroll report?

Yes, there is a seperate column in the report which shows the application type (e.g. net or gross) against every application.

How long would it take to switch the Net deduction option?

It is instant, as soon as the client decides to make it available for their employees, then can switch it on directly from the product setup on their administration portal using the guidelines provided.

Are we safe as an employer to use the Net deduction option?

The employer is providing the employee with an interest free loan to obtain a cycle and/or cycle safety accessory for the purposes of commuting to and from work. The loan will be provided to the employee as a letter of collection which can then be redeemed within any Halfords store in the UK or via Halfords.com. The amount is then deducted from the employee’s net pay over a period stipulated by the employer e.g 12 months. 

As you will see from the following link on the government website an employee on NMW or NLW is able to avail of a loan and then pay this back to their employer through a net deduction arrangement.

https://www.gov.uk/understanding-your-pay/deductions-from-your-pay

As you can appreciate, we are not tax and legal advisor's and recommend that you seek your own advice if further guidance is required.

What happens to salary deductions for CTW during Maternity or Sick Leave?

If an employee is absent from work during the period covered by their Cycle to Work Hire Agreement, their salary reduction will remain in place and will apply to any pay received (including sick pay or maternity pay). 

By entering into the Hire Agreement, they agree that the amount of the monthly salary reduction may be deducted from any such payments. 

For the avoidance of doubt, this will not include statutory maternity or sick pay.

Statutory maternity pay is paid for the first 39 weeks of maternity leave. If the employee is absent due to sickness, their normal pay ceases and is replaced by a sickness allowance. This allowance is made up of money from their employer, called Occupational Sick Pay (OSP) and money paid on behalf of the Inland Revenue/Government called Statutory Sick Pay (SSP). Deductions for Cycle to Work would still be made from the OSP but not from SSP.

If the employee is temporarily not in receipt of salary payments for any reason but remains employed by the organization, their Hire Agreement will continue and monthly reductions suspended until the earliest of the following events: 1) reverting to receiving salary payments, or 2) terminated employment from the organization.

If monthly reductions are suspended, the hire period will be extended by a period equivalent to the period during which monthly reductions were suspended.

More information can be found on the HMRC website and in this HMRC Cycle to Work guidance document.

If any issues arise that are not mentioned above, please contact clientsupport@rewardgateway.com who will be able to help.