When providing a bikes-for-work scheme, employers must be sure to comply with the tax rules.
Guidance produced by tax information provider Tolley, in partnership with Philip Rutherford, senior tax director for Molson Coors Brewing Company, says there is a general exemption from tax and reporting for the employer when providing bikes and associated safety equipment, but this only covers the use, loan or hire of the employer’s cycle and equipment. If it transfers ownership of bike or equipment, a taxable benefit could arise.
Employers must ensure the plan is open to all staff; this could include pooled bikes.
Bikes loaned to staff must be used for ‘qualifying journeys’, such as between home and work or for part of the journey, such as to the railway station. Some private use is allowed and HM Revenue and Customs will not expect staff to keep records, but would look for very obvious evidence that the conditions are not being met.
If the bike is provided through a salary sacrifice arrangement, any transfer of ownership can make the employee liable for tax. If the employee pays less than market value for the bike, thedifference between the market value and what the employee pays will be subject to income tax.