We are cycling loving accountants, so we encourage all to take advantage of the tax exemption for bicycles on the Cycle to work scheme.
Cycle-to-work exemption allows your business to provide employees, including directors, with the loan of a bicycle and cycling safety equipment, but without it counting as a taxable benefit in kind.
The main conditions are that:
- all your employees must be offered availability to a bicycle
- they must not own the bike, it is owned by the business
- they must mainly use the bike for commuting and business travel.
In practice, HMRC does not expect you or your employees to keep a record of use.
Please note. You do not have to use a ready-made cycle-to-work scheme to take advantage of the tax and NI exemption. Although, you might get a different impression from the cycle-to-work scheme websites.
If your business buys bicycles and makes them available to employees and directors, without a hire or loan contract, the exemption applies without the consumer credit problem or £1,000 price cap.
For example, you can buy a road bike costing £2,000, reclaim the VAT and the net amount qualifies for capital allowances to reduce the company corporation tax bill.