The Halfords Flexible Benefit Schemes programme seems like just another discounted bike offer. But it’s not.
When Halfords tells major employers up to 50 percent can be saved on bikes bought from Halfords, it’s not a scam or a one-off promotion, it’s a well thought-through programme that could see hundreds of thousands new bicycles bought for cycling to work.
Halfords is promoting the scheme as "cash neutral" to the employer. The savings come from existing tax benefits.
Employers offer their employees bike-buying loans. The bikes bought from Halfords attract VAT at 17.5 percent but this is claimed back by the employers. The loan is deducted from the total salary before tax and national insurance contribution (NI). After the loan is agreed and deducted from the salary, tax and NI is calculated therefore the value of the loan is tax and NI-free. So, there could be aggregated saving of more than 50 percent per bike.
Most major employers – with thousands of staff on their payroll – now have Travel Plan managers in order to get more people to cycle, walk, and take the bus to work. Halfords is targetting these Travel Plan managers with the new scheme and it’s promoted as the only one on offer. It is, but an IBD organisation such as the ACT might want to look at creating an IBD scheme. And quick.
The scheme is similar to one offering tax breaks for IT equipment purchase. See:
For PC buying there is a £500 ceiling but, as previewed on http://www.booost.uk.com/ – which is listing the Halfords scheme – there is no upper limit to the price of the bike bought by the employee.