Here at A to B we can be a bit sceptical about government schemes to boost cycling. Don’t forget, this is the same bunch that imposed on- the-spot fines on elderly ladies riding sedately on the pavement, but wouldn’t fund the cycle facilities to keep riders safe; that built more and bigger roads, when they claimed to be reversing the trend, painted speed cameras bright yellow, so motorists could avoid the fines, and promised to quadruple cycling, but oversaw the biggest decline in cycle use ever recorded. Why would we take any notice of a government scheme?

We should have noticed this one. Last year, the Chancellor announced that ‘green’ travel to work initiatives would be allowable as tax-free incentives for company employees, provided certain conditions were observed.The list of qualifying ‘Travel Plans’ included free or subsidised works buses, occasional lunchtime use of said bus, subsidies paid by employers to public bus services, season tickets, up to six cyclists’ breakfasts a year (big deal), workplace cycle parking, and – more crucially – bicycles and equipment.

Initial take-up was slow, because the conditions sounded complex, and few people had looked into the small-print of what appeared to be a routine announcement about bus subsidies. But things were moving, and soon Halfords, Giant, Specialized and Trek had coalesced around an agency called Booost – already providing computer equipment in a similar scheme. Under the guidance of the Association of Cycle Traders, the bicycle bit was soon up and running, and the early participants were joined by Gary Fisher.

All very cosy. In theory anyone could set up a scheme, but these big multi-national companies had made all the running, and they were understandably less than willing to share this profitable new business with other cycle manufacturers or small retailers.

…the scheme is for the mass-market, and the mass-market is happy with Halfords bikes…

Booost blames government demands that tax payers’ money should not be spent on BMX and childrens’ bikes, forcing it (rather oddly) to stick with the biggest manufacturers and retailers. Somehow, this bias towards big business all sounds very New Labour. Booost reassured us that bikes could be bought through independent cycle retailers too, and the Association of Cycle Traders has been skirmishing with Halfords to bring this about. It claims that ‘several hundred’ bike shops have expressed an interest, but to date, few have made sales.

In theory, Halfords can source bikes from any manufacturer, but in practice… well, you get the picture. According to a Halfords representative, ‘The scheme is for the mass market, and the mass market is happy with Halfords bikes.’ Well, maybe, but mass market bikes are not necessarily the best commuter machines. More importantly, folding bikes are hardly represented at all.

Trek and Specialized market reasonable Dahon-based folders, and the Giant Halfway is a neat little bike, but there’s not much else. Dahon bikes are sold in some Halfords branches, and should thus be admissible, but the really specialised folders, such as Bike Friday, Birdy, and particularly, Brompton, are excluded. Halfords is not authorised to sell any of these, and although the company will endeavour to source one by fair means or foul, it is not in a position to honour the warranty or provide servicing.With the notable exception of the Giant Lafree, electric bikes are excluded too. Meanwhile, Brompton has tried hard to get on the scheme, but been repeatedly rebuffed.

How does it Work?

Like all government schemes, it’s a bit complicated.The employer agrees to lease a number of bicycles (plus safety equipment, accessories and arguably even trailers – there’s no limit) chosen by its employees.When the purchases are made, the employer claims back the VAT, effectively knocking 17.5% off the purchase price, with the saving (hopefully) being passed to the employee.The bike is now owned by the employer, and loaned to the employee for a set period; the interest-free loan payments are deducted at source, effectively making the purchase free of income tax and National Insurance too. After a set period, the employee can purchase the bicycle for a nominal ‘fair market value’, and it becomes their property. Payments can be made over any period, but twelve months is typical – this interest-free loan being a useful bonus in itself.

Got that? The details of individual schemes vary, and the tax band of the participant has an effect too, so it’s hard to be precise about the savings involved, but most tax payers would expect to pay around half of the normal retail price – higher rate tax payers even less. Obviously, the more you earn, and the more expensive your cycling tastes, the greater the advantage.

The only loser is the bicycle retailer, obliged to pay a small administration fee to Booost.The employer saves 12.8% in National Insurance contributions, which can be passed on or used to cover administration costs. Of course, participating employers also get a useful recruitment incentive and happier, healthier employees.

According to the Inland Revenue, the bicycles can, like company cars, be used for leisure purposes, provided they are used ‘mainly for travelling to and from work’.And as with any other bicycle, if the machines are used for work-related journeys (not commuting, unfortunately), employers can also pay employees up to 20p per mile free of tax to cover depreciation.

Where’s the Catch?

At the moment there are a whole set of problems. Halfords says it will do business with small employers, but Booost is generally only willing to talk if you’re in the market for hundreds of bikes.The perception for many smaller employers and cycle retailers is that the whole thing is just too much trouble.

Fortunately, there’s no need to deal with Booost or Halfords if you don’t want to. Frustrated with the current schemes, independent cycle retailers are setting up their own. One of the first is the ‘CycleScheme’, launched by Avon Valley Cyclery of Bath. Avon is a key supplier of folding bikes, including Moulton, Dahon, Brompton, Airnimal and Birdy.The company also specialises in racing and mountain bikes from Giant, Marin, Gary Fisher, LeMond and Klein.Thus CycleScheme will cover some classic commuters, plus the sort of rare and specialist bicycles that you really wouldn’t want delivered to the back door of your local Halfords. And despite being a division of a retail outlet, CycleScheme claims to work with other independent shops – the intention is to rival the national coverage of Booost itself.

Larger employers are starting to do their own thing too. Company ‘A’ with 350 employees was rejected as too small by Booost, but set up its own scheme, negotiating discounts with individual cycle shops, which get a nice simple cash sale. Company ‘A’ also saved on leasing fees by arranging a short 3 month lease period and paying cash for the bikes. In the first month, 20 employees have signed up.

The Future

Unless the government changes its mind and withdraws the bike scheme, the impact on top-end bicycle sales will be huge. Bike to work programmes are particularly well suited to folding bikes, because employers are also allowed to provide tax-friendly loans to cover season tickets up to a £5,000 ceiling. So the means exists to subsidise every part of an employee’s rail/cycle commute, from the bicycle and accessories, through the train fare, to cycle storage at work, and even the occasional breakfast!

Booost web www.booost.co.uk
CycleScheme tel 01225 448933
web www.cyclescheme.co.uk mail info@cyclescheme.co.uk