Guide to the Cycle to Work Scheme
As an employer, you can easily implement a tax exempt loan scheme for employees. To qualify for the tax exemption, the loan of bicycles and safety equipment must be available to all employees.
What’s the scheme all about?
Employers who purchase bicycles and safety equipment for loan to employees (up to £1,000) can benefit from treating the purchase as capital expenditure eligible for corporation tax relief. VAT can also be claimed back on the purchase unless you are registered on the VAT flat rate scheme.
The loan of bicycles and safety equipment under the cycle to work scheme removes any tax charge to the employee that would usually arise on a taxable benefit.
How can I be eligible for the scheme?
To be eligible for the tax exemption and to comply with the Consumer Credit Act 1974 the agreement must be a hire agreement and not a hire purchase agreement.
Ownership of the bicycles and safety equipment must remain with the employer for the duration of the loan. The employer can offer the employee the right to purchase at the end of the loan agreement for fair market value.
The bicycle and safety equipment must be used primarily for work purposes, so for travelling to and from the workplace.
What safety equipment can I purchase?
The following safety equipment is allowed:
- Bicycle 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
- Bicycle clips and dress guards
- Panniers, luggage carriers and straps to allow luggage to be safely carried
- Child safety seats
- Locks and chains to ensure bicycle can be safely secured
- Pumps, puncture repair kits, bicycle tool kits and tyre sealant to allow for minor repairs
- Reflective clothing along with white front reflectors and spoke reflectors
We are here to help
If you would like to discuss your requirements further, we can help you. Call 01962 790237 or contact enquiries@taxevo.co.uk for more information.
