For a number of weeks businesses across the country have been implementing various plans to begin re-opening shops and offices. One of the most discussed challenges for many people is the commute to and from work.
From most of my conversations with friends and family, there is a general keenness to return back to the office. However, accessing public transport is an issue and most are exploring alternative forms of transport, namely bicycles which is what this article focuses on. Fortunately, cycles have evolved to now include electrically assisted, making them even more accessible.
Cycle to Work
Employers are able to lend or hire cycles and equipment to employees and the routes to facilitate this can include: lending cycling equipment to employees, keeping pool cycles for general use by employees or facilitate employees in purchasing their own equipment.
Each option could be exempt from tax if the scheme is made available to all employees and the employees taking up the scheme are mainly using it to commute between home and the workplace or the workplace and home.
The scheme can be operated under a salary sacrifice scheme or by lending funds to the employee. A loan to an employee can be tax free if total loans in a tax year do not exceed £10,000. The loan scheme is commonly used to help with season tickets for travel.
Businesses entering into such schemes will be able to claim capital allowances and recover any VAT suffered.
What is Salary Sacrifice
This is where an employee gives up their right to cash earnings in exchange for benefits. It will need to be a contractual arrangement which will enable the employee to take advantage of benefits without incurring tax and national insurance.
Employers can provide employees with non-cash vouchers which can be wide ranging. Any non-cash voucher connected to work parking at or near the workplace will be exempt from tax. Non-cash vouchers can include cycles or safety equipment.
Trivial benefits, which meet certain conditions and are provided to an employee or member of their family or household can be exempt from tax. A trivial benefit will be exempt where the value does not exceed £50 and can include cycles and safety equipment.
We can assist in exploring the various options, outlining the obligations and assist with reporting.
If you have any questions regarding this article, please get in touch with our tax team.