On your bike tax-free

The Cycle to Work scheme was introduced over 20 years ago to help promote the use of environmentally friendly modes of transport. The scheme allows employers to provide bicycles and cyclists’ safety equipment to employees as a tax-free benefit. The

The Cycle to Work scheme was introduced over 20 years ago to help promote the use of environmentally friendly modes of transport.

The scheme allows employers to provide bicycles and cyclists’ safety equipment to employees as a tax-free benefit. The scheme must be offered to all employees and the bike must be used mainly for qualifying journeys, i.e., between home and work. However, pleasure use of the bike is also allowed. Where the scheme conditions are satisfied employees can benefit from a significant tax and National Insurance Contributions (NICs) reduction. In addition, there is no employer liability to NICs.

The cycle to work benefits only relate to the loan period, however, it is commonplace for an employer or a third party bicycle provider to offer the employee the bicycle / equipment they have been using for sale after the loan period has ended. The bike may be offered to the employee for sale at a fair market value, but this must be done as a separate agreement.

Employers of all sizes across the public, private and voluntary sectors are eligible to take part in the scheme to provide (technically loan) bicycles and cyclists’ safety equipment to employees as a tax-free benefit. The scheme can also be used for electronic bikes known as e-bikes.

Source: HM Revenue & Customs Tue, 22 Aug 2023 00:00:00 +0100

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