Tax free bikes with the cycle to work scheme
Tax free cycles
The UK’s cycle to work scheme is a government initiative that enables all UK employers to offer tax free cycles and cycling equipment to their employees. As an employee you can look to save up to 50% on £1000 worth of cycles and cycling equipment.
The scheme was implemented in 1999 as part of the Finance Act, and is aimed at promoting healthier travel options for commuters and reducing pollution. So far thousands of employees have take advantage of these amazing savings, why not get involved too?
Who is eligible for the cycle to work scheme?
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 kind of bike can I buy, what about equipment?
All types of bicycle are offered under the scheme. The definition of a bicycle is any cycle or tricycle having two or more wheels that is not classified as a motor vehicle, although electrically assisted cycles are also covered by this.
You can also spend your money on cycling equipment, including all safety equipment such as helmets and lights, as well as clothing, bags, tools and spare parts.
You may spend up to £1000 in total, including equipment. This price may cover more than one bike, which is also acceptable. For example you may need to cycle form home to your train station and then from the other end of the line to work.
How does the cycle scheme work?
The cycle to work scheme offers discounts by removing the tax charge that would otherwise apply. For example, if you buy a bike outside of the scheme you will have already paid income tax on your money, and also have to pay VAT on the bike itself. The scheme removes these taxes by offering the bike VAT free and letting you pay direct from your salary before income tax.
- 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 employees 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.