Throughout the hire period, the bikes – and any other equipment – are still the property of the company. HMRC guidance advises that for a programme to be tax compliant, a company cannot simply hand over everything to the employees when the hire period ends. They must transfer ownership through certain methods: P11D or Managed Extended Hire.
In association with Halfords, Reward Gateway has developed a unique process to ensure that the end of hire is managed in a compliant and secure way.
This process only applies for Cycle to Work applications made and processed in SmartPay™.
The process is simple:
1. The client will be notified that an employee is reaching the end of their Hire Period. This will be via email, one instalment before the agreement is due to end.
2. The client should log in to Reward Manager to see a list of everyone who is eligible to transfer ownership to Halfords.
Reward Manager > SmartPay™ > Manage > Products > CycletoWork > Managed Extended Hire tab
All Agreements that are reaching end of hire will appear in a list. If any employees contact the employer to request that their details are not passed to Halfords for the purpose of Managed Extended Hire, they can be marked 'ineligible' on the list. If everyone is eligible to transfer their ownership to Halfords, hit 'Approve all'.
3. The client should raise an invoice for £1 + VAT for each application and send to Reward Gateway:
Reward Gateway (UK) Limited,
265 Tottenham Court Road, London W1T 7RQ
VAT number: GB100148184
Company house number: 05696250
4. Reward Gateway will arrange payment of the invoice to the client via bank transfer.
5. Reward Gateway will then transfer the ownership to Halfords and the most up to date contact information for employees via Secure File Transfer.
5. Halfords take ownership of the bike and will contact the employees with 3 options:
- Our strongly suggested option is to enter into a Managed Extended Hire agreement with Halfords. Although still part of a hire agreement, there is no further cost or payment required from the employees. Choosing this method means no extra tax needs to be paid.
- Employees can return the bike to Halfords and it will be donated to charity.
- They can take ownership of the bike for 18% or 25% of the cost.
Halfords manage all the administration, so the client can be happy knowing everything has been taken care of to save their employees the most money possible.
With Halfords taking ownership of the bikes at the end of the hire agreement, employees can apply for the Cycle to Work programme again – so it's a great opportunity for employers to open another application window.
To setup Managed Extended Hire, a client will need to sign an addendum to their current Agreement. This can be provided by Client Success Managers or the Implementation team.
Process Flow for Managed Extended Hire in SmartPay™
For instructions on how to manage any applications that were not submitted or approved in SmartPay™, please click here.