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Salary sacrifice cycle-to-work scheme limits

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Updated department for transport guidance confirms that employers may now offer cycling equipment above the £1,000 limit allowed under most salary sacrifice cycle-to-work schemes, by running the scheme through an FCA-approved third-party provider.

Employers are permitted to operate loan agreements under salary sacrifice arrangements for the cycle-to-work scheme without full FCA authorisation provided the total value of the goods subject to the agreement does not exceed £1,000 (by virtue of SI 2001/1201).

The revised department for transport guidance (dated June 2019) now makes clear that the £1,000 limit will not apply where the employer offers the salary sacrifice scheme through a third-party provider, who is already authorised by the FCA for consumer hire of cycles (see section 6 of the guidance). Employees will usually enter into a consumer hire agreement directly with the scheme provider.

Employers who have set up such schemes through a third-party may still be required to:

  • obtain limited authorisation from the FCA to act as a credit broker; or
  • act as an ‘appointed representative’ under the supervision of the scheme provider.

See ‘Cycle to work scheme implementation guidance for employers’

Issue: 1454
Categories: News