In order to get more people cycling to work, the government’s Green Transport Plan (IR176) provides tax incentives which can generate up to a 50 percent saving on new bikes and ‘commuting equipment’ such as helmets, panniers and lights.
The GTP is similar to the Home Computer Initiative which allows employees to buy tax-reduced laptops for working at home. Both GTP and HCI have been around since the 1990s but have never been well promoted by the government, and are complex to operate.
This all changed when Luton-based marketing agency Butterfield Morris Bushell Ltd. created Booost to promote the GTP and HCI schemes and take on the admin underpinning the schemes.
The GTP scheme operates thus: the employer buys the bike, and accessories, and then deducts the cost through the employees’ monthly wage packet over the space of a year or more.
Employees pay no tax or National Insurance on their repayments, and after VAT rebates and other discounts, up to 50 percent of the ticket price will have been knocked off.
In theory, the employee must use the bike for journeys to work but this isn’t policed.
To date, Booost has only worked with large companies because of the HR and finance department implications of the scheme: it’s complex.
The soon-to-launch Booost-in-a-box is for smaller companies.
Booost caused a stir in the bicycle world last year with its promises of half price bikes from pukka bike shops but was unable to roll out to smaller companies because of restrictions imposed by the Office of Fair Trading, Customs and Excise and the Inland Revenue.
The Office of Fair Trading was concerned about who actually owned the bikes bought by companies on behalf of their employees. This wrinkle has now been ironed out.
Halfords also has a GTP scheme: Bikes4Work. This is part of Halfords’ business-to-business operation, and is run by Paul Bullett.
Bullett said the GTP scheme was "one of the biggest things to happen in cycling for many years." He’s giving a paper on the subject at the VeloCity conference in Dublin, May/June.
Bullett stresses that the GTP tax breaks are open to any employer, no company has to go through an intermediary if they choose not to, but the complexities of the scheme mean that only companies with 50+ employees and who already operate staff benefits schemes, would be likely to jump on board.
Originally, the Halfords GTP scheme was run through Booost but when Chris Morris of Butterfield Morris Bushell Ltd offered a scheme for independent bike shops via the ACT, Halfords created Bikes4Work.
Halfords still works with Booost, but Booost no longer promotes the link with Halfords.
Avon Valley Cyclery of Bath sells the Booost scheme instore but created Cyclescheme to be able to offer bike brands other than Giant, Specialized and Trek.
Cyclescheme.co.uk and taxfreebikes.co.uk went online on Tuesday.
AVC’s Richard Grigsby said: "Cyclescheme operates independently of Avon Valley Cyclery. It’s a facilitator, like Booost, but more flexible."
Independent bike shops who sign up with Cyclescheme will be able to offer any package of bike plus accessories.
Cyclescheme takes a cut of the sale to cover its admin costs.
Later in the year the Department of Transport will give all the GTP schemes a boost, as it were, by actively promoting what is still a little known ‘tax dodge’ yet with huge potential for the bike trade. The DfT will produce a booklet on all the many tax, VAT, and fair trading rules and regulations that govern Green Transport Plans.
ACT and Booost: