Cycle to Work Scheme

Make the best of the cycle to work scheme for your employee’s.

We can partner with your company to successfully implement this scheme at work.

Employee’s cycling to work achieves:

• Smaller parking requirements
• Reduction of local area pollution and congestion
• Keeps the workforce, fit and healthy. Reduces stress and increases productivity and morale
• Electric bikes remove the traditional barriers of long journey times, hills, headwinds and the need to shower after a long cycle.

The Cycle to Work scheme is a UK Government annual tax exemption initiative introduced in the 1999 Finance Act to promote healthier journeys to work and to reduce environmental pollution.

It allows employers to loan cycles and cyclists' safety equipment to employees as a tax-free benefit.

The exemption was one of a series of measures introduced under the Government's Green Transport Plan.

A Cycle to Work scheme does not require the prior approval of HMRC.

Employers of all sizes across the public, private and voluntary sectors can implement a tax exempt loan scheme for their employees.

The employees wishing to participate should be paid through the PAYE system.

The scheme is not available to the self-employed or employees on the National Minimum Wage.

There is no limit on the total value of the equipment including the cycle. It is possible to loan two cycles to one employee if, for example, that employee needed a cycle at either end of a train journey between their home and place of work.

However please note, that the Office of Fair Trading (OFT) has advised that the group consumer credit license will cover schemes up to a value of £1,000. To extend that, an additional credit license is required.

How it works
The exemption removes the tax charge that would otherwise apply to cycles and cyclists' safety equipment loaned to employees provided the following conditions are met:

Ownership of the equipment is not transferred to the employee during the loan period;

Employees use the equipment mainly for qualifying journeys;   i.e. for journeys made between the employees home and workplace, or part of those journeys (for example, to the station), or for journeys between one workplace and another

The Cycle to Work scheme is made available generally to employees of the employer concerned and not confined to directors or offered to them on more favourable terms.

How to set it up

To take advantage of the tax and Class 1A NICs exemption, an employer can simply buy a cycle and cyclists' safety equipment, reclaim the VAT (if applicable), make use of the capital allowances and loan it to an employee for qualifying journeys to work.

This arrangement means that the employee's normal salary arrangements are not affected.

It may be, however, that the employer wants to recover the cost of providing the cycle and safety equipment loaned to the employee. Usually this would be done through a salary sacrifice arrangement.