The following notes set out the general scope of the Cycle to work scheme. This provides a number of tax advantages that employers can use to encourage employees to cycle to work.
Who can use the scheme?
Employers of all sizes across the public, private and voluntary sectors can implement a tax exempt loan scheme for their employees. To maximize the benefit of implementation, it is desirable that participation in a scheme should be as broad as possible. To qualify for the tax exemption, the cycles and cyclists' safety equipment loaned by the employer under the scheme must be available to employees generally with no groups of employees excluded. Further information on general availability can be found in the Employment Income Manual on the HM Revenue and Customs website at EIM21664, EIM21665 and EIM 21666: https://www.hmrc.gov.uk/manuals/eimanual/updates/eimupdate070510.htm
The test of available to employees generally can have implications for employers with staff who are under 18 years of age or on or near the National Minimum Wage.
What equipment is included under the tax exemption?
Eligible equipment includes cycles and cyclists' safety equipment. The tax exemption defines a "cycle" as 'a bicycle, a tricycle, or a cycle having four or more wheels, not being in any case a motor vehicle' (192(1) of the Road Traffic Act 1988 (c.52)). An electrically assisted pedal cycle can be included under the scheme.
Cyclists' safety equipment is not similarly defined in the legislation and a common sense approach should be taken to the equipment provided. This could include:
- Cycle helmets which conform to European standard EN 1078
- Bells and bulb horns
- Lights, including dynamo packs
- Mirrors and mudguards to ensure riders visibility is not impaired
- Cycle clips and dress guards
- Panniers, luggage carriers and straps to allow luggage to be safely carried
- Child safety seats
- Locks and chains to ensure cycle can be safely secured
- Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs
- Reflective clothing along with white front reflectors and spoke reflectors
It is the employer's choice what safety equipment is offered, but you may wish to confirm with your local tax inspector whether the equipment you provide falls within the tax exemption.
If you would like to set up a scheme for your employees, or lobby your employer, we can provide guidance. There are different rules for self-employed businesses.