Summer’s on its way, so why not dust off your bike and commute to work? We’ve become a nation of cyclists in recent years and if your bike is looking a little worse for wear, the cycle to work scheme maybe something worth considering.
Under the scheme businesses buy or rent bikes for employees to use, and there’s no tax and NI to pay. The scheme must be available to all employees, but they don’t all need to take up the offer for the company to get the tax break. It’s a great way to give staff the opportunity to get fit, and although the bikes are mainly meant for work-related journeys HMRC doesn’t normally check up on this.
The bikes have to be owned/rented by the company not the staff, although they can be given to them after a period of time (a year is generally considered acceptable). When a bike is given to an employee, the amount of ‘benefit in kind’ to be paid is usually pretty small. There’s also the option to sell it to them instead so there’d be no taxable ‘benefit in kind’, as long as the amount is no smaller than HMRC’s guide price.
The bikes offered to employees don’t have to be of equal value. Cheaper ones can be given to the majority of employees and more expensive models to senior staff and directors. Even HMRC’s guide price for more expensive bikes is quite generous. On a brand new bike worth £1,800, the guide value would only be 25% of that (£450) after a year. So if you were to give an employee this bike and they pay 40% tax, their tax bill would only be £180!
For more information on the cycle to work scheme, get in touch on 01782 279615.