[Updated: 11th October 2019]
Lots of you have been asking whether the FLIT-16 is eligible for the UK's Cycle to Work scheme - we are very pleased to let you know that it is! This means that backers in the UK can save up to a pretty tidy 42% off your brand new ebike through the initiative.
As we are selling our folding ebike through Kickstarter, things are slightly different to usual with how it all works, so this blog post just gives you a run down of the details.
What is the Cycle to Work scheme?
The Cycle to Work scheme was introduced 20 years ago as a government initiative to get more people out of their cars and cycling to work instead.
The scheme allows employees to save money on their bike and cycling gear by getting it tax free, meaning that you can save up to 42%!
The UK government has recently clarified the scheme's rules, making it clear that it can be used for bikes worth over £1,000, which most quality ebikes are. It's worth mentioning that most Cycle to Work scheme providers still have a £1,000 limit, which is why we recommend going through either Green Commute Initiative or Cyclescheme* who do not have a spend limit.
*Cyclescheme have very recently (early October 2019) lifted the £1,000 limit, however it is now the employer that decides the limit. If your employer is registered with Cyclescheme, you can find out what the spend limit is here.
How does the Cycle to Work scheme work?
With the Cycle to Work scheme, you pay for the bike and cycle equipment over a year in monthly instalments which are exempt from tax. The amount that you save depends on the income tax bracket that you fall under - higher rate tax payers will save more.
Technically, the Cycle to Work scheme provider owns the bike while you pay the instalments, and you are effectively 'hiring' it from them. Once you have paid the final instalment, you can either pay for the bike at what is deemed Fair Market Value (which is up to 25% of the original value of the bike), or the scheme provider can take it back.**
**It's slightly different if you go through Green Commute Initiative through which you buy the ebike for a nominal fee of £1 at the end of the process.
You can save up to a further 42% on your FLIT-16 through the Cycle to Work scheme!
How to use the Cycle to Work Scheme with the FLIT-16:
First, have a chat with your employer and find our which Cycle to Work Scheme providers they are registered with. We have an agreement in place with both Cyclescheme and the Green Commute Initiative - so you need to make sure that your employer is registered with either of these. If they are not, below are some instructions on how your employer can register:
It's worth mentioning that more employers are registered with Cyclescheme as it has been around for longer. As of October 2019, you can purchase bikes over £1,000 through either Cyclescheme or the GCI. However, as mentioned above, with Cyclescheme it is your employer that decides the spend limit, so it is worth checking out what that is.
With the GCI, you can purchase bikes over £1,000 no matter what, but your employer will still have to approve the request to go through the GCI.
Cyclescheme and the Green Commute Initiative are the two providers that you can get the Cycle to Work Scheme through for the FLIT-16.
Using Green Commute Initiative as the provider:
The Green Commute Initiative (GCI) and Cyclescheme are both slightly different to most Cycle to Work scheme providers. This is because, as mentioned above, they both don't have the £1,000 spend limit that some providers do. The main difference between the two is just the options that you are given after the 'rental period' with the bike.
The GCI are authorised and approved by the Financial Conduct Authority, which means that they can loan cycling equipment without a spend limit. If you want to find out more, head over to their website at https://greencommuteinitiative.uk/
Below is a step-by-step guide on how it all works with the FLIT-16.
1. Buy your FLIT-16 through Indiegogo (if you haven't already!): your pledge acts as a deposit
If you haven't already, purchase your FLIT-16 through our Indiegogo campaign. Your pledge effectively acts as a deposit for the ebike.
2. Your employer buys a 'voucher' for the FLIT-16 from the GCI
As soon as the bike is ready for delivery (early next year), it becomes eligible for the Cycle to Work Scheme. At this point, your employer then needs to buy a 'voucher' for the FLIT-16 from the Green Commute Initiative (GCI).
Here's an example: if you pledge £1,500 for your FLIT-16, your employer needs to purchase a voucher for £1,575 (£1,500 + 5% GCI retail scheme fee) from the GCI.
The GCI then uses these funds to buy a FLIT-16 from FLIT, and FLIT pays the GCI its retailer scheme fee (£75).
3. Receive your refund from FLIT for your pledge
FLIT then refunds your pledge.
4. Start saving through TAX FREE monthly payments for your ebike
You then repay your employer for the FLIT-16 through what is known as salary sacrifice scheme - i.e. the monthly payments are deducted from your salary before tax.
This saves you 32% (£480), 42% (£630) or 47% (£705) on the total cost (assumed to be £1,500 in this example) depending on your income tax bracket. Including the 5% (£75) GCI retail scheme fee used in this example, this gives a net saving of 27% (£405), 37% (£555) or 42% (£630).
You can choose a monthly repayment plan to suit you - either repaying the total amount over a 12, 18 or 24 month period. Have a chat with your employer to agree a term that suits you.
What happens after the term agreed?
As mentioned above, in the Cycle to Work scheme you are technically 'hiring' the ebike from your employer. The hiring period for the GCI is always one year.
At the end of one year hiring period, HMRC usually requires you to pay Fair Market Value for the ebike (25% of the current value). However through the GCI you can avoid this!
They will give you a loan (completely free of charge!) to use the ebike for a period of five years.
After the five year period, you can then buy the FLIT-16 from the GCI for a nominal sum of £1 so that you fully own it.
Here is a useful flowchart from the GCI of how it all works:
Information overload? Here's a quick summary:
After purchasing your FLIT-16 through Kickstarter, as soon as the ebike is ready for delivery (we'll let you know, don't worry!) your employer buys a voucher for the FLIT-16 from the GCI.
You're then refunded for your Kickstarter pledge by us. You then repay your employer in monthly installments by accepting a reduced salary in exchange for the benefit of using your FLIT-16.
Since your salary is reduced you’re not paying tax on the cost of the ebike, hence the saving!
Download the GCI employee/employer information pack
Using Cyclescheme as the provider:
Cyclescheme are one of the biggest Cycle to Work scheme providers - it is pretty likely that your employer is registered with them! For a quick overview of how to apply through Cyclescheme, watch this video.
The main difference between the GCI and Cyclescheme is what happens after the 'rental period'.
Recent change of rules (and removal of £1,000 limit!)
As mentioned above, as of October 2019 Cyclescheme have lifted the £1,000 spend limit that was previously in place. This is because the Department for Transport recently updated their rules so that employees can request to buy cycle equipment, with no maximum value, through Cycle to Work.
Previously, your employer would technically own the bike, and you would be hiring it from them. You could do this because the Financial Conduct Authority (FCA) allowed employees to loan cycling equipment worth up to £1,000.
Since the rules have changed, Cyclescheme, like the GCI, now have their own FCA Authorisation. This means that it is Cyclescheme that you are hiring the bike off, instead of your employer (similar to the GCI).
You can read all about the changes here.
1. Buy your FLIT-16 through Indiegogo (if you haven't already!): your pledge acts as a deposit
If you haven't already, purchase your FLIT-16 through our Indiegogo campaign. Your pledge effectively acts as a deposit for the bike.
2. Your employer buys your FLIT-16 through Cyclescheme
As soon as the bike is ready for delivery (early next year), it becomes eligible for the Cycle to Work Scheme. At this point, you need to apply to Cyclescheme for the value of your pledge (e.g. if your pledge was £1,500 you'd apply for the value of £1,500).
Your employer and Cyclescheme will then review your application and pay us for your FLIT-16.
3. Receive your refund from FLIT for your Kickstarter pledge
Once we've received payment from your employer, we'll refund your original pledge!
4. Start your monthly repayments (TAX FREE!)
Here's when you start saving! Once your bike has been delivered, you'll start your monthly repayments to your employer. This is the same as the GCI in that it is a salary sacrifice scheme, so the monthly payments are deducted from your salary before tax.
With Cyclescheme, your repayment period is one year. Again, similar to the GCI, this year is effectively a 'rental period'.
What happens after the one year 'rental period'?
So, this is where it's slightly different to the GCI initiative. With Cyclescheme, at the end of your one year rental period they will get in touch with you to discuss your options. Basically, you have three to choose from:
1. Own it later - You pay a small refundable deposit (either 3% or 7% of your certificate value) and continue to use the equipment for 3 years. No other payments (whatsoever) are required during this time. At the end of the 'Own it later' period, no further action or payment is required if you wish to keep your FLIT-16 - we simply retain your deposit and transfer ownership to you. Cyclescheme refunds the deposit if you do not wish to keep your ebike.
2. Own it now - Take ownership of your FLIT-16 by paying Cyclescheme the market value (e.g. for a one-year-old package this would be 18% or 25% of the value of the FLIT-16 in accordance with HMRC requirements).
3. Return - Return your FLIT-16 to Cyclescheme at your own cost and pay no ownership fee.
Admittedly the process is quite complicated! We're happy to answer any questions that you may have, just drop us an email and we'll get back to you as soon as we can.