Cycle To Work and Tax Free Bicycles

Due to the increase in fuel prices over recent months, I’ve now started cycling to work. My employer has suggested that they could offer me a new bicycle under the “cycle to work” scheme. If I accept this offer, will I get taxed on this?

1st June 2010

The UK government is keen to encourage use of more sustainable "greener" modes of transport, so introduced substantial tax breaks in the Finance Act 2003 for employees who cycle to work.

No tax or National Insurance is payable if your employer provides you with a bicycle and/or related safety equipment and they ensure the provision of the bicycle and equipment is available to all staff, and they are used for journeys to and from the workplace.

Some firms have implemented a salary sacrifice scheme to encourage the use of this scheme, as it reduces the amount of employers National Insurance Contributions payable.

However, in December 2009 HM Revenue & Customs clarified where employees are aged under 18, they are prevented them from entering into a legal agreement under which the employer would loan them the bike. Therefore they cannot participate in the scheme which means that the ‘All Employee’ condition of the cycle to work scheme is not met. You should ensure you check the validity of the scheme before agreeing to a salary sacrifice.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Call us today to make an appointment at your local office

0800 0523 555

Or submit an enquiry