How does the Isle of Man scheme work and how much can I save?
Cycle to work operates as a 'salary sacrifice' employee benefit. This means that you agree to give up part of your salary in exchange for a benefit – in this instance the benefit is a bike and/or accessories. The salary sacrifice is taken from your gross salary (before tax) which means that you will pay less Income Tax and National insurance.
The amount you will save will depend on your circumstances (specifically your rate of taxation) and the cost of the bike and/or accessories you request.
The good news is that everybody saves:
Saving for standard rate taxpayers is 21% (comprising 10% income tax saving and 11% National Insurance Contribution saving)
Saving for higher rate taxpayers is also 21% (comprising 20% income tax saving and 1% National Insurance Contribution saving)