This scheme was set up by the government to encourage a healthier workplace, and is available to all employers. There are of course a few conditions and only certain items of equipment may be purchased.
The scheme must be open to all employees, whether or not they can or wish to make use of it and allows the employer to buy and loan to the employee:
- A bike upto the value of £1000
- Safety equipment including reflective clothing, lighting, bells/horns and luggage carriers as required. Strangely waterproof clothing is only allowed if is reflective.
Conditions to qualify
- Ownership is not transferred to the employee
- More than 50% of the journeys must be for work, although there is no requirement for mileage records the employee may lose the exemption if this cannot be proved.
- HMRC approval is not required, the employer can simply buy the bike for the employee
Employer considerations
- Although the bike can be given as a free loan there is also the option to offer a salary sacrifice to recoup part or all of the money laid out. This will also save employers NI costs.
- The cost of the bikes can be claimed a capital allowances just like any other equipment, for most employers this will be 100% tax relief as it will be covered by the Annual Investment Allowance (upto £250k from 1 January 2013).
- The bike can be retained by the employer at the end of the loan period or the employee can buy it, and the rate the employee pays is as little as 18% of the original cost after 1 year (for a bike worth less than £500)
- The employer can also offer a free meal or refreshments to employees on “cycle to work” days
This scheme has alot to offer if employees are within a reasonable commuting distance of their workplace and may be used as a generous benefit if the salary sacrifice is not used. This article summarises the main criteria but if you have any specific queries relevant to your personal circumstances you should seek professional advice before taking any further steps. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”