Rumours of Cycle to Work’s death have been greatly exaggerated. Cyclescheme’s head of commercial operations Daniel Gillborn explains why C2W is stronger than ever to Jonathon Harker…
You know the story. Around six months ago the Cycle to Work initiative, the tax-free bike buying incentive aimed at boosting numbers of employees biking to work, was subject to a rule change from Her Majesty’s Revenue and Customs.
As Cycle to Work had widely been seen as a driver of bike sales in the period since its introduction back in 1999, initial reaction to the change was gloomy. Was the scheme now on the ropes? And would the number of bikes sold be subsequently slashed?
Rumours of the death of Cycle to Work were premature, says Daniel Gillborn, head of commercial operations for the largest C2W provider Cyclescheme. “We stood still for three weeks to see what the best course of action was. I felt it was better to do that and make the right decision rather than make a knee jerk reaction and possibly get that wrong.”
For those not versed in the intricacies of HMRC terminology, the rule change was taxing to understand, to say the least. So what did it actually mean? Gillborn explains: “There is now clarification from the HMRC using their table. So, if you stick to the table, HMRC will not investigate you as an employer.
Sounds a bit scary? Not so, says Gillborn: “We believe that it has helped. In the last six months we had to think about how we could best use the matrix and comply with it while retaining the same benefits for participants.
“The best way of doing that is for them to have an extended usage agreement with us and to wind down the value of the bike with age. So our process is based around the employee keeping hold of the bike, using and enjoying the same benefits and when they take ownership of it at the four-year stage – it’ll be worth a lot less, so they’ll pay a much lower end of hire payment at the period.
“The actual material value difference is just £10 – even at the £1,000 level. So for the people with bikes of the value of £500 or less, they’re actually better off.”
National Insurance goes up for the employee and employer on April 1st by one per cent and for people on the scheme that gets passed back to the employee, so the £10 – or one per cent – difference will disappear. “It will be exactly the same as it was before the change came into effect. On top of that, employers will be saving another one per cent in national insurance – a message we have been driving home to them.”
And getting that message across has been an area of focus for Cyclescheme.
The firm has spent six months working with employers, employees and partners, but also with the bike brands. “We’re much more engaged with the brands. We’ve spent a lot of time with the guys at Trek, Merida, Giant and Specialized to get closer to them and how they’re communicating with their dealers and how to get their dealers on board.”
Cyclescheme is also working with its biggest rivals – fellow C2W providers Halfords, Evans and Cycle Solutions, in the Cycle to Work Alliance: “We’re a member and yes it is good for us – it enables us to lobby Government and directly engage with MPs. The research it has produced has been enormously positive. The Alliance gives us a single voice, while still being competitors.”
Cyclescheme itself, now 35-staff strong (five new bodies in the last year) has seen big employers like Asda and Sainsbury’s and 35,000 strong Derby Council either commit again to running the scheme or close to re-signing. The Ministry of Justice and Prisons Service has just been picked up: “They’re great adopters because the workforce tends to live close to where they work. It’s great news.”
The ever busy Cyclescheme also launched its iGo vouchers at the end of last year, an initiative gaining momentum, the firm tells BikeBiz: “To be fair it is early days and we’re not talking big numbers at the moment. Coming into the retail vouchers market you never get an instant overnight success. But the reaction we’ve had so far is very good. The people who have come in with us from the start are the ones that will benefit from it the most. 350 retailers have signed up to them and we want to have nearly 1,700 as we are with Cyclescheme. There’s some great stuff we’re working on that will give them a real platform.”
Cyclescheme has a number of other initiatives on the go for 2011 too, now easier to achieve with an expanded office space. Gillborn adds: “We really are getting out there and talking – that’s our key message. I’m really keen to increase the level of communication.”