Halfords cycle2work FAQ's
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What happens at the end of the loan period?
There is no automatic entitlement for you to take ownership of the cycles and safety accessories at the end of the loan period. However, your employer may choose to give you the option to purchase the equipment.
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How much does it cost to set up a Halfords cycle2work scheme?

Halfords do not charge a fee or any administration costs to set up and operate the cycle to work scheme. Please note, there may be a requirement for internal administration resource eg: payroll involvement, which should be factored into your own internal implementation.

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Will a salary sacrifice affect my entitlement to benefits?

Possibly, although in most cases the effect is likely to be small. However, you need to be aware of the implications of paying less tax and NI contributions and accepting a reduced salary. It is recommended that you seek professional advice if you have any concerns or need more information.

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If I decide not to participate in the scheme now, can I join later?

Depending on the success of this year's scheme, your employer may choose to repeat it in the future. However, your employer cannot guarantee that there will be another opportunity to participate.

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Where can I get my bike and cycling safety equipment?

Halfords has the largest selection of cycles and cycling safety equipment in the UK. Look at our huge range of top brand products

Still can't find what you are looking for? You can contact the Halfords cycle2work team with details of your requirements and they will be happy to suggest the options available.

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What if my bike gets stolen/accidentally damaged?

It is recommended you obtain separate insurance, or check your bike is covered under your home contents insurance policy. If your home contents insurer covers the bike, you must inform them that your Employer (or their nominated agent) owns the bike. Payments will not stop or be suspended due to loss or damage to the bike.

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What if an Employee leaves early or is made redundant?

If you leave before the end of the hire period, you must pay your employer the balance of the amount still to pay and this will deducted from your final net pay. You may then have continued use of the equipment without further payment until the hire period expires, when you may be offered the opportunity to purchase the equipment for its then fair market value. However this transfer of ownership is the subject of a separate agreement and is not governed or influenced by the Hire Agreement you sign for this scheme.

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Can the Directors have better or more equipment?
No. Under the cycle2work rules Directors cannot be offered cycle2work on preferential terms.
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How long do I have to apply for the scheme?

Your employer will decide the closing date for the scheme. You will usually have about four weeks to select and order your Letter of Collection, but, to avoid missing the deadline, why not do it now?

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What equipment is available?

In addition to selecting a bike, the cycle2work scheme also allows employees to select cycling safety equipment. However, exactly what products this covers is not defined under statute and HMRC stipulate that a common sense approach should be taken. (http://www.hmrc.gov.uk/manuals/eimanual/eim21664.htm )

Please see below a list which can be used as a guide on what is and is not available through cycle2work

 

Items such as frames and forks are cycle components, not safety equipment: safety equipment is something you add to the cycle or the cyclist to make cycling safer.

If an employee were to access cycle components through the scheme, that Employer’s cycle2work scheme would be non-compliant.  As a minimum, HMRC would pursue the employer for incorrect P11D reporting and tax/NIC for the non-compliant items. As HMRC would not be able to determine which employees have chosen non qualifying equipment or indeed the employer, HMRC could deem the whole scheme non-compliant.


Available             

cycle helmets which conform to European standard EN 1078,

bells,

bulb horns,

lights including dynamo packs,

mirrors and mudguards to ensure the riders visibility is not impaired,

cycle clips,

dress guards,

panniers,

luggage carriers and straps to ensure luggage is carried safely,

locks and chains to ensure cycle can be safely secured,

pumps,

puncture repair kits, tool kits and tyre sealant to allow for minor repairs,

reflective clothing,

white front reflectors,

and spoke reflectors.

child seats           

 

Not available

Forks

Frames

Sat Navs

Cycle computers

Go pro camera

Turbo trainers

Cycle racks

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Can an employee enter into more than one Hire Agreement concurrently?
An employee can have more than one Hire Agreement for Cycle2Work with you at a time. However you must make sure that any combination of Hire Agreements does not take the employee below the National Minimum Wage.  As an employer, you may chose to remove this option restricting employees to one hire term at a time.
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When can I collect my bike?
If it is in stock at your chosen Halfords store simply surrender your LoC and present a form of ID. If it is not in stock, you should request that your chosen bike is ordered in to that Halfords store. Your bike will then be built and inspected by a qualified bike mechanic, ready for you to ride away.
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How long should my scheme be open to my employees?

To ensure the smooth running of a scheme and encourage take up we would recommend an election window of no more than a month. This targeted approach will influence the success of the scheme.

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What is a Group Consumer Credit License?

The Office of Fair Trading has issued a Group Consumer Credit License allowing any employer to run a cycle2work scheme. The license allows you to hire equipment up to the value of £1,000 inclusive of VAT.

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Do I have to be a Director to run the scheme?

No. Anyone in an organisation can promote and manage the process. An authorised representative must sign Halfords' Supplier Agreement, and sign the leasing document should there be one in place.


During the scheme, an authorised representative must sign the employee Hire Agreement so that it can be executed.  (Please ensure that you engage HR and Finance in the initial set up and discussion.)

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How soon can I run a second scheme?
You can run a second scheme at any time after your first one has completed. Our recommendation would be to speak with Halfords Account Manager or Implementation Manager to arrange an annual plan.
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Who owns the equipment?
The legislation that governs a cycle to work scheme states that the Employer must own the equipment. There can be no automatic right for the Employee to own the equipment at the end of the Agreement. If they do, they cannot claim the tax exemption. Therefore a cycle to work scheme operates as a loan: the Employer is technically loaning the equipment to the Employee for a fixed-period of time. Although Employees do not actually own the equipment, they remain custodian of the equipment and are free to use it as they wish, providing it is mainly for cycling to work.
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What happens if I do not use the bike for commuting after I have joined the scheme?

You will no longer qualify for the tax relief afforded to this benefit. In such circumstances your payroll department will arrange for the remaining salary reductions to be taken from your net pay i.e. after tax and National Insurance have been deducted. You cannot return the cycle and have your salary re-adjusted.

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What if I can't get to a store, will I miss out?

No, you can still participate. If there is not a Halfords store near your home or work, or you are unable to visit a store, Halfords can arrange to get the bike to you.

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Can a Letter of Collection be used to get a bike for a family member, partner or friend?

No. The cycle must be used by you, mainly for commuting to work. For example: journeys made between the home and workplace, or part journeys (e.g. to the station), or for journeys between one workplace and another.

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I've only been with my employer for a short time. Can I take part?

Your scheme criteria will determine when you are able to apply.

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What is the maximum value of equipment I can obtain through cycle2work?

The Office of Fair Trading has issued a Group Consumer Credit Licence allowing any employer to run a cycle2work scheme. The license allows you to hire equipment up to the value of £1,000 inclusive of VAT. An employer can then choose to offer whatever range of values within the £1000 limit that they deem appropriate. To see the values available in your scheme, please click "apply now" and review the Min and Max options within the "letter of collection value" section. For more information about your scheme limit, please review your internal communications.

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What if I already own a bike - why would I want a new one?

Your old bike needn't be redundant. You may find that as you start to cycle more and more that you need a bike with higher quality componentry, which will allow you to ride more efficiently. You may also sometimes take different routes when travelling to work, i.e. a summer route and a winter route, which might benefit from a different type of bike for each journey.

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What bikes are available through the Halfords cycle2work scheme?

At Halfords, we have the UK`s widest range of brands in-store, online and via our UK Partner Independent Bike Shop Network.  Read all about the other fantastic brands that we can source by browsing "Our Brands" section of our website.

 

http://www.cycle2work.info/siteadvicecentrebrand

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Can I take part in more than one scheme?

You can technically apply again each time your employer runs a scheme, however, your employer may decide to prevent you from joining another scheme until your first Hire Term has lapsed.

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Who is eligible for the cycle2work scheme?

Employers of all sizes across the public, private and voluntary sectors can implement a tax-exempt loan scheme for their employees. To maximize the benefit of implementation, it is desirable that participation in a scheme should be as broad as possible. To qualify for the tax exemption, the cycles and cyclists’ safety equipment loaned by the employer under the scheme must be available to employees generally with no groups of employees excluded.

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How can an Employer benefit from the cycle to work scheme?

By operating a cycle to work scheme, an Employer can expect to

  • Improve their reward and recognition program
  • Make savings from Employer's National Insurance contributions
  • Contribute to an environmental or green transport policy
  • Release valuable car parking space with less people using cars to commute
  • Encourage a fitter, healthier lifestyle

 

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VAT: Can a VAT exempt organisation simply not claim the VAT on the purchase and not pay over VAT included in the amount of salary sacrificed?

Because the employer is making a supply of the bicycle, which is a supply for VAT purposes HMRC cannot set aside the normal VAT treatment that must be applied. A basic tenet of the VAT system is that VAT rests with the final consumer, in this case the employee.

 

Therefore, employers are expected to claim from HMRC the VAT incurred on purchasing the bicycle and pay over to HMRC VAT included in the payments received (the salary sacrifice).

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VAT: My organisation have never reclaimed VAT and passed it on to employees: can we continue with our previous processes?

No, whilst employee’s savings will remain the same, you need to adjust your internal processes.

From 1st January 2012 you are now required to account for output tax on the salary sacrifice amount.

 

It may now be possible to reclaim the VAT (input tax) incurred on the initial purchase of the bikes and safety equipment (even if you didn’t previously do so). We continue to seek clarification from HMRC on accessing unclaimed input tax on previous schemes.

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VAT: How can Halfords help explain the changes to colleagues and applicants?

We are keen to ensure that we fully support you through this period of change, and we are ready to assist you as and when required. 

 

  • Our website contains a short film containing an explanation of the VAT featuring Dave Pickering, Halfords Group Tax Manager . You can watch the video here: http://www.cycle2work.info/sitecommunitylatestnews#HMRCVAT2
  • We will continue publishing all information in the News section of our website (www.cycle2work.info ) as well as communicating directly with all our clients.  This section also contains specific examples.
  • Halfords cycle2work team will be at the Employee Benefits Live show 27th – 28th September at stand 33. We would be very happy to see you and answer any questions you have
  • Call the Halfords cycle2work helpdesk, open from 8am until 7pm Monday to Friday on 08450 778850
  • We are able to refresh any marketing literature for your employees with current savings and FAQ’s: please contact your Implementation Manager to discuss further.  (This could include electronic scheme advertising such as emails and website banners, as well as paper marketing such as payslip inserts, desk drops, leaflets and posters)
  • Halfords are uniquely placed to support cycle2work schemes at a local level via our nationwide network of 465+ stores.  Please contact the cycle2work team on 08450 778850 to discuss the availability of a roadshow

 

Halfords is on hand to help you communicate these changes across your organisation: please contact us on 08450 778850 or www.cycle2work.info to discuss in more detail

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VAT: My organisation is not VAT registered: am I affected?

You will not be required to account for VAT on salary sacrifice payments nor will you be able to recover VAT on your original purchase of the bikes and safety equipment. The amount of salary sacrificed by your employees will be considered when determining whether or not you have exceeded the VAT registration threshold (currently £73,000).

 

Your employees can continue to benefit from tax and NIC savings through salary sacrifice and you will also benefit from NIC savings.

 

Should your business become VAT registered, you will need to account for VAT (from 1 January 2012) and may be able to recover input tax – subject to the usual VAT recovery rules.

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VAT: What rate of VAT should an employer charge their employees for the hiring of a bicycle and safety equipment?

The hiring of a bicycle is chargeable to the standard rate of VAT (currently 20%). HMRC have confirmed that where safety equipment is provided with a bicycle to an employee then the safety equipment is incidental to the main supply of the bicycle and therefore the entire supply is considered to be chargeable to the standard rate of VAT.

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VAT: Will employers be required to issue VAT invoices to their employees?

No, employers will not be required to issue VAT invoices to their employees.

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VAT: Can a VAT partially exempt business reclaim all VAT charged on their bicycle and safety equipment purchase(s)?

Yes, as of 1 January 2012, VAT partially exempt businesses will be able to recover in full the VAT on their purchases. It is a principle of the VAT system that, broadly speaking, if you make supplies which are subject to VAT then you can reclaim the VAT charged on all purchases forming a direct cost component of the supply.

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VAT: Can I pass on the “new” VAT charges to my employees?

Many employers implemented cycle to work schemes that will continue to exist on 1 January 2012 and had not budgeted for these “new” VAT charges when originally setting-up their scheme. These employers had relied upon the VAT guidance in force at the time which specifically stated that VAT was not payable on salary sacrifice payments. The VAT changes will clearly reduce the employer’s projected income from each employee’s salary sacrifice payments as VAT will become payable out of each employee’s salary sacrifice payment from 1 January 2012.

 

These employers may wish to obtain further payment from their employees to cover the new VAT charges. In the first instance, employers should consult their hire agreements to see whether the terms of the agreement allow them the right to demand further payment. In most cases, we expect the hire agreement to be silent on this matter and therefore any change to the arrangement is likely to require the employee’s consent. Likewise any proposal to bring forward all salary sacrifice payments falling on or after 1 January 2012 is likely to require the employee’s consent.

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VAT: Will these VAT changes be applied retrospectively?

No, employers are only required to account for VAT on salary sacrifice payments made after 1 January 2012. HMRC will not look to assess employers for VAT on salary sacrifice payments arising before this date.

 

The changes will affect all existing C2W schemes in operation at 1 January 2012.

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VAT: How will the VAT changes affect employers’ savings?

All employers will continue to benefit from employer NIC savings on the amount of salary sacrificed by an employee.

 

From the 1st January 2012 standard Employers’ NIC saving will increase with the inclusion of VAT in employees salary sacrifices as NI saving will be based on the gross value of the salary sacrifice inclusive of VAT.

 

Additionally, all VAT registered businesses are now able to recover (from HMRC) VAT charged on the original purchase invoice issued by Halfords (or the finance provider) - even where they couldn’t previously do so. We anticipate that employers will no longer pass on any recovered VAT to their employees via a reduced salary sacrifice, as employers will be required to account for VAT on the employee’s salary sacrifice payments.

 

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VAT: How will the VAT changes affect employee savings?

From 1 January 2012 employees can expect to make savings between 32% (basic rate taxpayer) or 42% (higher rate taxpayer) on a new bike and safety accessories through income tax and National Insurance Contributions (“NIC”) savings.

 

Income Tax and NIC savings should remain unaffected for all employees already in cycle to work schemes except where the original terms and conditions are amended.

 

NB. In schemes where the VAT element has not been passed onto employees savings will remain unaffected.

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VAT: What do the VAT changes mean for the future of cycle to work?

The VAT changes have removed the final layer of uncertainty surrounding the operation of the scheme and we are now all able to work from a position of knowledge and confidence - as such Halfords welcomes and supports the clarity the ruling provides.

 

Employers and employees will continue to benefit from fantastic savings available through Halfords’ cycle to work scheme

We remain at the forefront of scheme compliance and are working with our clients to deliver cost neutral schemes, which reflect the recent VAT changes and deliver fantastic employee savings (which typically cannot be matched by any other provider). We have been greatly encouraged by our clients’ responses to the changes and we believe that employers will continue to benefit from Halfords’ cycle to work scheme for many years to come.

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VAT: What are the “new” VAT changes and when are they being introduced?

The change to the treatment of VAT in relation to Cycle to work schemes means that all VAT registered businesses providing cycle to work benefits to their employees through salary sacrifice arrangements will be required to account for VAT on all salary sacrifice payments falling on or after 1 January 2012.

 

This means that all cycle to work schemes in operation on 1 January 2012 will be impacted by these changes. All schemes concluding before this date will remain unaffected by the VAT changes.

 

These changes will have a knock-on effect entitling all VAT registered businesses to be able to recover (from HMRC) VAT charged on the original purchase invoice(s) issued by Halfords (or the finance provider) - even where they couldn’t previously do so.

 

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