Tax Free Bikes for Employees via the Goverment Funded Cycle to Work Scheme
Posted by HJUK
Did you know you can get a free bike, tax free to cycle to work? To promote healthier journeys to work and to reduce environmental pollution, the 1999 Finance Act introduced an annual tax exemption, which allows employers to loan cycles and cyclists’ safety equipment to employees as a tax-free benefit.
This has many incentives for both employer and employee. Employers may reap the benefits of a healthier workforce, reduce their carbon footprint and save on NI contributions, whilst employees can get tax benefits, save money on travelling costs and a way to get fit at the same time. This is especially good for those in hospitality jobs who often have to get public transport to work.
How does it work?
Cycle to Work allows employees to get up to £1,000 worth of bike and safety equipment through their employer. A monthly salary sacrifice charge is then paid to effectively ‘hire’ the bike and kit, typically over a 12 or 18-month period.
So employees can get a brand new bike without initially having to spend a penny. Then, because they are funding this through salary sacrifice, the ‘cost’ of the scheme is taken out in manageable monthly instalments, which also helpfully reduces tax burden. However employees are advised to check first with their employer or HMRC to find out the specific tax benefits personal to their own situation.
Employers can then save 13.8% of the total value of salary sacrifice because of reductions in the amount of National Insurance Contributions due.
Setting Up a Cycle to Work Scheme
To help employees take advantage of this tax-free benefit, an employer can simply buy a cycle and cyclists’ safety equipment and loan it to an employee for qualifying journeys to work. This arrangement means that the employee's normal salary arrangements are not affected. However, if the employer wants to recover the cost of providing the cycle and safety equipment loaned to the employee. This is known as the salary sacrifice arrangement.
Look for more information on how to set this up via the Government website https://www.gov.uk/government/publications/cycle-to-work-scheme-implementation-guidance
This post is written by Hospitality Jobs UK, an online advertising job board, established specifically for the Hospitality and Catering industries. We advertise Chef Jobs, Pub & Bar Jobs, Hotel Jobs, Restaurant Jobs, Leisure Jobs and Contract Catering Jobs. You can call us on 0844 800 6011 or email email@example.com.