What is Cycle to Work Plus?

Prior to June 2019, Cycle to Work schemes stipulated that employees hired their cycle and safety equipment from their employers. This was possible because of the Financial Conduct Authority’s (FCA) exemption that allows employers to loan their staff a cycle and safety equipment worth up to £1,000. 

Since June 2019, as detailed within government guidance from the Department for Transport, in some cases the hire agreement may be between the employee and a third party, such as Halfords Cycle2Work.

Halfords Cycle2Work would, therefore, hire the equipment to the employee directly, and the cost is regained by the employer through salary sacrifice deductions.

There are two scenarios where the £1,000 exemption will not apply and the employer can set their own maximum limit for employee applications for cycling equipment:

1.  If the employer is authorized by the FCA for another separate regulated activity; or
2.  If the agreement is with a third party who have their own FCA Authorisation, such as a scheme provider like Halfords Cycle2Work

As Halfords Cycle2Work already has FCA authorization, clients are able to increase the Cycle to Work limit using scenario #2 above.

This means that employees would enter into a consumer hire agreement directly with Halfords Cycle2Work, instead of with their employer.

Halfords Cycle2Work has updated its legal agreements to ensure our clients and employees can take advantage of this change to the guidelines, and use their FCA authorisation to place any desired limit onto any Reward Gateway client's Cycle to Work scheme.

How to increase the application limit on existing RG Cycle to Work programmes

Allowing employees to apply for an increased limit will make use of Halfords' FCA authorisation.

To do this, clients must first sign a Supplier Agreement with Halfords Cycle2Work. Clients can request their Client Success Manager to start this process with the Halfords team, who will provide the Supplier Agreement.

The application process then works as follows:

1. Employees apply for Cycle to Work via their employee engagement platform 
2. During application, the employee must give their consent to a Pre Contract Agreement, a Hire Agreement with Halfords and Salary Sacrifice Agreement with their employer.
3. Employer reviews the application within SmartPay™ 
4. Once approved by the employer, Halfords issues a Letter of Collection to the employee and the employee can collect their new bike
5. Reward Gateway sends an invoice to the employer for payment 
6. As the Hire Agreement is with Halfords from the beginning, there is no need for the employer to transfer ownership at the end of the Hire Period

Frequently Asked Questions

Will the employer and employees still make savings?

Absolutely! The employer still makes savings of 13.8% when running a cycle to work scheme. Employers can also benefit from 0.5% savings on the apprenticeship levy.

For employees, they will also continue to make up to 47% tax and NI savings on the cost of the bike and safety accessories dependent on which level rate taxpayer they are.

See the tables below for an example of savings made by both the employer and an employee.

Employer Savings

Employee Savings

Can employees 'top up' the LoC amount with their own money?

In light of the inclusive nature of the new guidance, the Department for Transport has clarified that it is no longer acceptable to ‘add funds’ (also known as ‘topping up’).

This means that any employee in need of a bike or package worth £1,000 or more must go through the new process.

What happens at the end of hire?

Halfords Cycle2Work offer three fully compliant end-of-hire options in line with the new government guidance:

• Zero Cost Extended Hire Most Popular Option

Employee opts into zero cost extended rental agreement. They will have nothing more to pay and ownership will be automatically transferred to them at the end of the extended hire period.

• Take ownership of cycle using HMRC Fair Market Value

Employees pay the fair market value and take ownership immediately (usually 18% or 25% of the original value)

• Return the goods to your local Halfords store

Where can employees redeem their Letter of Collection?

Employees can purchase their new bike with any of the following retailers:

 Supporting Documents