HMRC and Bicycles
The government wants to promote cycling and has hence introduced various tax reliefs. These have been extended due to coronavirus to include electric cycles. The government have also committed to pop up cycle lanes and cash grants to local authorities to make it easier for people to use bikes to get around.
Cycle Repairs Vouchers
HMRC is offering £50 vouchers from June 2020 to get your old cycle repaired so it can return to use. Details awaited.
Tax free facilities for cyclists
If an employer installs facilities for those cycling to work then they are tax free benefits for the employee and tax deductible for the employer
These facilities can include
- Cycle parking
- Changing rooms
If you travel on your own cycle for business, then you can claim mileage at 20p per mile
Tax free Cycles for employees
If an employer provides an active cycle and cyclists safety equipment to an employee, then this can be a tax and national insurance free benefit if the following conditions are met
- all employees are offered this benefit
- the cycle is principally used either to get to work or on business trips
This can cover individual cycles per employee or a pool of cycles for general use. It can also cover vouchers for cycle hire.
An employer may choose to offer such a cycle as an extra to its employees or use the cycle to work scheme, or a combination in order to fulfil the condition of offering this benefit to all employees.
Cycle to work scheme
An employer may not want to give an employee a cycle as an extra benefit, or maybe just not such an expensive a cycle as the employee wants; so HMRC has provided a scheme whereby the employee can still get a cycle tax free on their current salary package.
The scheme has some peculiarities under consumer credit regulations, but essentially the company acquires the cycle, by purchase, hire or lease and the employee pays the employer a monthly hire charge, deducted from wages before tax and national insurance.
- Cycle must be for active travel
- Maximum of 2 cycles per employee
- Can include cyclist’s safety equipment
- Scheme must cover full cost of included items
- Scheme provider must be authorised
- Employees under age 18 must have a guarantor
- The cycle is principally used either to get to work or on business trips
- All employees are offered this benefit
- At no point during the agreement does the employee own the cycle
The definition of cycle is a bicycle, tricycle or a cycle having four or more wheels, not being in any case a motor vehicle. And it can include an electrically assisted pedal cycle or electric bicycle.
For people with disabilities this includes a cycle with adaptations or a non-standard cycle, e.g. tricycle, hand-cycle, cargo-cycle (with or without electronic assist)
Scheme agreements typically last for one to five years per cycle.
There are special rules on valuing and buying the cycle at the end of the agreement.