Savings Defined

Employee Incentives, Benefits and Rewards are now a very popular solution to increasing moral, employee loyalty, adding value and savings to businesses. Understanding the savings is an important part in knowing the value being added to the business and employees.

National Insurance – the value varies and is controlled by the chancellor. There are different catagories but generally the 2009/10 rates are, Employee's pay 11% and Employers 12.8%.

VAT – the value is controlled by the chancellor. Currently at 15%.

Income Tax - the actual amount you pay depends on your personal tax band, and the way your company runs the scheme.

Bike Scheme:
Fair Market Value – each bike is assessed separately, in our experience the market shows to be around 5% of the original voucher value plus VAT. Please note in a hire-purchase scheme the fair market value cannot be stated before or during the scheme as this could be considered a benefit in kind as hire-purchase does not warrant any tax-relief. However the fair market value payment needs to be taken into account when calculating the total savings.
With salary sacrifice and

If a hire-purchase scheme is set up, the bike and goods remain the property of your employer until the hire period finishes, unless the employer uses finance; in this case the finance company will own the bikes during the hire period.

Most employers opt to sell you the bike and accessories, and employees will pay the fair market value; this is the amount that a buyer would pay to a seller to purchase the bike and equipment.