Cycling is becoming an increasingly popular way of commuting to and from work. Therefore, with cycle schemes and loans being easy to implement many employers are seizing the opportunity and delivering additional incentives to their employees through:
First 10,000 miles is 24p per mile Over 10,000 miles is 20p per mile
With the cycle allowance employees are reimbursed for their business travel. However, it must be remembered that business travel is classified as travelling from a ‘normal workplace’ to a client, not from home to work. The figures above are based on HMRC’s approved rates; if your company reimburses below the approved mileage limit, additional relief can be obtained by your employee through completing a self-assessment tax return or completing a form P87.
Employers can enter an agreement with an employee whereby part of their salary is replaced with a non-cash benefit (for example a loaned cycle). This will be financially beneficial to both the employer and employee as there will be a tax and NIC saving as the benefit will be from gross employment income. At the end of the term, the employee can have the choice to purchase the cycle, which will trigger a benefit for class 1A NIC.
Employers Providing Bicycles
This is where the employer provides all employees the option to hire or lend cycles/ cycle equipment (similar to pool cars). The benefit will be exempt from tax provided that the cycles are offered to all employees and are for qualifying journeys (can include home to work). If this is made available the firm will need to ensure that there is sufficient numbers to ensure availability to all employees (this does not mean one per person). Certain employees will be excluded including: work experience, casual workers etc.
PAYE Settlement Agreement
The employer may wish to reward employees by providing cycles/ cycle equipment, without the employee incurring any cost (loss of salary, NIC, PAYE). This can be achieved via a PAYE settlement agreement as the employer will be subject to tax and NI on the grossed up value of the benefit. The last three options are great ways for employees to get a bike tax-free. Currently, there are 534,000 bikes within the UK that are part of the cycle to work scheme.