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Bikes for employees

25 April 2024

The Cycle to Work scheme allows employers to provide bicycles and cyclists’ safety equipment to employees as a tax-free benefit.

Employers can take advantage of the Cycle to Work scheme to provide their employees with bicycles and safety equipment tax-free. This scheme should be accessible to all employees, promoting inclusivity within the workplace. The primary use of the provided bicycle should be for commuting between home and work, encouraging a healthier and more environmentally friendly mode of transport. However, the scheme also permits private use of the bicycle, providing flexibility for the employees.

When employees meet the conditions set by the scheme, they can enjoy a significant exemption from tax and National Insurance Contributions (NICs). This financial incentive can make a substantial difference to employees, enhancing their overall compensation package. Furthermore, employers are not liable to pay Class 1A NICs, making the scheme financially beneficial for them as well.

The benefits associated with the Cycle to Work scheme are applicable only during the period of the loan. However, it is a common practice for the employer or a third-party bicycle provider to offer the used bicycle or equipment for sale to the employee after the loan period concludes. This allows the employee to continue using the bicycle or equipment they have become accustomed to. The sale price is based on the fair market value, ensuring a fair and transparent process. However, this sale requires a separate agreement, maintaining clear boundaries between the loan and sale processes.

Employers from all sectors – public, private, and voluntary – regardless of their size, are eligible to participate in the scheme. This wide eligibility makes the scheme accessible to a diverse range of organizations. They can provide (or technically loan) bicycles and safety equipment to their employees as a benefit free of tax. This not only enhances the employees’ compensation package but also promotes a healthier and more sustainable mode of transport.

The scheme also includes electronic bikes, also known as e-bikes. These bikes are an excellent option for those who may find traditional cycling too strenuous or for longer commutes. Including e-bikes in the scheme ensures that as many employees as possible can benefit from it, regardless of their physical fitness or commuting distance. This makes the Cycle to Work scheme a versatile and inclusive initiative that promotes health, sustainability, and financial benefits.

Source: HM Revenue & Customs Mon, 22 Apr 2024 00:00:00 +0100

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