How the scheme works
Getting your new bike is simple and we have produced a step-by-step guide to help you through the process so you know what to expect at each stage of your application. Below are some of the key points.
Its important for you to understand that the Government’s Cycle to Work scheme is based on bicycle hire with no automatic right to ownership at the end of the hire period. You will not own the bike during the hire period. You will be hiring the bike from GCI and we will retain the ownership until we agree otherwise. We will write to you with ownership options at the end of the hire period, ensuring HMRC rules are adhered to. Unlike other scheme providers, we will not charge you a 7% end-of-scheme fee. We want you to make the maximum possible savings.
Commuting on an electric bike
1. The first step is to choose your new bike and any accessories you might need. We refer to this as the ‘bike package’. The package will obviously contain a bike but you can also include safety equipment, clothing, tools and spares. HMRC rules mean you are not allowed to include GPS or bike computers. Now contact one of our registered bike shops and ask for a quote for the package.
2. The next step is to submit an application. If your organisation is registered with us, you’ll need your GCI Employer Code and submit via the Corporate application page. If you are using our Instant GCI scheme, you won’t need a code and can submit here.
3. When submitting an Instant GCI application, a pro-forma invoice will be emailed to you. This is for a GCI voucher to cover the cost of the package. Please take the pro-forma invoice to your HR department so payment can be made. Without payment, your application will not be processed.
4. When submitting a Corporate GCI application, your request will be sent to your HR department for approval and they will arrange payment for a GCI voucher to cover the cost of the package.
5. When your application is approved and payment received, GCI will process your application and confirm the order with the bike shop. GCI will email you two documents for electronic signature; the Hire Agreement (3 months) and the Salary Sacrifice agreement. Please sign both of them. Until we receive the signed documents, nothing further will happen with your application.
6. Since your employer has paid GCI for the voucher, you’ll need to reimburse them. This done via a salary sacrifice arrangement. Your employer will reduce your gross (before tax) pay by the value of the voucher. This means you won’t pay tax or National Insurance on the amount of salary you sacrifice. Depending on your tax rate, you’ll save either 32%*, 42%* or 47%* on the cost of the package. We recommend you insure the bike package as even in the event of theft, your salary sacrifice will continue.
7. The salary sacrifice period will vary and you should ask your employer what repayment period is acceptable to them. Common periods are 12 – 24-months but can be as much as 60 months. Remember, the Salary Sacrifice Agreement is between you and your employer and is entirely separate from the Hire Agreement with GCI.
8. When the 3-month Hire Agreement with GCI expires, we will contact you with ownership options. We will recommend that you take the Extended Loan option (5 years and 9 months) to take the bike to 6 years old. At this point, there will be no Benefit-in-Kind tax payable to HMRC. If you want to take ownership before the bike is 6- years old, we will advise your payroll department of the tax payable for your P11D.
9. If you opt for the Extended Loan Agreement, when the bike is 6 years old, we will contact you to arrange the transfer of ownership. This will be a separate agreement and subject to a £1 processing fee. The £1 simply acts as a marker to protect you from any future claim that HMRC may make.
Remember, although GCI retains ownership of the bike during both the Hire and Extended Loan Agreements, in practice the bike is yours to do as you wish from day one and you can enter into additional or new GCI schemes at any time.