Have you introduced one of these schemes, or ever considered doing so? In the right circumstances (mainly depending on how far you have to travel from home to work, naturally enough) there are significant tax breaks available and they have now been made more flexible where the bicycle is sold to the employee later on.
There is a tax exemption that allows employers to loan bicycles and cyclists’ safety equipment to employees as a tax-free benefit. The exemption can only apply if certain conditions are satisfied. These conditions include a requirement for the cycles or equipment to be available generally to all employees of the employer. This does not mean that every employee has to be provided with a cycle or equipment, just that the offer of cycles or equipment is open to all employees if they wish to take it up.
The bicycle exemption relates solely to bicycles that are not sold to the employee. However, an employer or a third party cycle provider may choose to offer the bicycle for sale to the employee after the loan has ended. If the employee is able to buy the cycle for less than its market value, the difference is liable to tax and to employer’s Class 1A NIC liability. It can be difficult to establish the market value for that purpose, and in order to simplify valuation, HMRC have just published a simplified approach to valuing cycles sold after the end of a loan.
Where a bicycle is not sold to the employee and continues to be loaned beyond the original period set out in arrangement, the tax exemption continues to apply as long as the usual conditions continue to be satisfied.
October 15th, 2010
