Cycle to work and see the tax benefits, urges accountancy org

To tie in with Bike Week – 14-22 June – the Institute of Chartered Accountants in England and Wales (ICAEW) has advised businesses of the tax advantages of staff cycling to work – and that’ as well as the health, cost and environmental benefits.

ICAEW:

If an employer provides employees with bicycles or cyclists safety equipment, the benefit is exempt from tax provided that the bicycles or equipment are available to all employees and that, broadly, more than half of their journeys are travelling from home to work. The employer will also not have to pay tax or National Insurance Contributions on the cost of providing parking for the bicycles.

Staff are not expected to keep detailed records of time spent cycling or miles travelled and the tax exemption also covers the provision of a voucher for hiring bicycles and equipment.

If the bike is later given to the employee, the cost of the benefit is its market value at the date of transfer.

Employers can also pay staff 20p a mile tax free for using their own bicycle for business travel. Although higher payments will be subject to tax, many employers do pay a considerably higher mileage allowance and the money can be an obvious inducement to travel by bike.

Some companies also designate a few days each year as ‘cycle to work’ days’. In order to encourage employees to take part, bosses may provide a free meal or refreshments. Usually such meals are a taxable benefit in kind but regulations exempt them from tax, as long as they are provided on the allocated days – so bosses could take advantage of this next week.

Anita Monteith, Technical Manager from the ICAEW Tax Faculty and herself a cyclist, said:

“Regular cyclists who commute already know that cycling is a good deal cheaper than running a car – especially with rising fuel costs. As well as the tax benefits there are other benefits as well to employers. Car parking problems can be eased and company bikes are easier to maintain than company cars. It can also be beneficial to a businesses image to be seen as environmentally friendly.”