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Cycle to Work scheme is a UK Government tax exemption initiative introduced in the Finance Act 1999 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.

On 6 August 2010 HMRC issued a statement to clarify the fair market value, which should be charged if the employees want to take ownership of the bike at the end of the repayment. The full statement including the matrix is available here:
Some of the providers have always recommended continued use at no further charge as the best option to avoid any additional cost and remain within the scheme guidelines.

On 28th July 2011, HMRC published guidance stating that VAT needs to be accounted for on Salary Sacrifice payments for Cycle to Work from the 1st January 2012. Employers can claim back VAT under some circumstances, but may no longer pass the VAT savings on to the employee.

Who is eligible
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.

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'. An electrically assisted pedal cycle can be included under the scheme.

What value of equipment can be supplied
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 the Office of Fair Trading (OFT) has said that the relevant group consumer credit licence will cover schemes up to a value of £1,000. To extend that, an additional credit licence is required.

How does it work
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 employee's 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.

So guys if your current bike is showing it's age or you're just looking for an upgrade why not take advantage of your boss helping you buy you your next bike..
Admittedly not all companies will want to get involved but mention to your boss that he can claim the VAT back and he might get involved, you've got nothing to loose by asking..
Let me know how you get on..
Last update on January 19, 7:14 pm by Les Stoner.
"There is no glory in Practice.. But without Practice there is no glory"
Want this at work so much Unhappy
only upto a grand not a lot about for that ...
ride it like you stolen it ;
   likes this.
Would get me a road bike
Is Alex going to be a Roadie ..?
Don't forget the Lycra lol
"There is no glory in Practice.. But without Practice there is no glory"
No I love mtb but would like a road bike to work on stamina and to plod about on
Also want to see how much faster they are Smile
ask Scooby to borrow his old plodder
ride it like you stolen it ;
Think it might be a bit big for me haha
we need to bring it up at work again
ride it like you stolen it ;
mind you its 1000 pound on a bike or extras.....let me think 2 more six packs please
ride it like you stolen it ;
I've got a great "Six Pack" it's just hidden under my flabby gut..! haha
"There is no glory in Practice.. But without Practice there is no glory"
thought that was a 12 packWink
ride it like you stolen it ;
I'm not far off a 12 pack haha
"There is no glory in Practice.. But without Practice there is no glory"
leon turner said...

only upto a grand not a lot about for that ...

It doesn't have to be limited to £1k, it is dependant on your employer. If they've got a consumer credit licence then they can offer more. You also have the option of topping up the amount you spend yourself, although this can lead to issues if you leave your employment early as you wouldn't have a legal right of ownership
I understand. The fact that you won't explain . . . explains everything
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