Cookies are small text files that are stored on your computer when you visit a website. They are mainly used as a way of improving the website functionalities or to provide more advanced statistical data.
Cycle to Work Scheme Update
Newsletter issue - September 2010.
The cycle to work scheme allows employers to lend bicycles to their employees tax-free, and in some cases the employees can purchase the bicycle at the end of the loan period. However, the Taxman is looking carefully at abuses of this scheme...
- Some employers treat the loan of the bicycle to the employee as part of the employee's salary and reduce their cash wages proportionately. This is known as a salary sacrifice, and the arrangement must be agreed with the relevant employee in advance. If bicycle are only provided to employees under salary sacrifice arrangements the whole cycle to work scheme may lose its tax exemption, as some employees cannot have their cash pay reduced due to the National Minimum Wage rate rules.
- It is quite common for the employee to purchase the bicycle from the employer at the end of the loan period. However, the Taxman says that where there is an automatic transfer of the bicycle to the employee at the end of the loan period, the tax exemption for the cycle to work scheme is also lost.
- The second problem with the transfer of the bicycle to the employee is how to establish the market value of the bicycle at that time. If the employee pays the employer less than the market value for the bicycle the difference is treated as employment income subject to tax and NI. As a top of the range sporting bicycle can cost several thousand pounds, the second hand value can be quite significant!
The Tax Office have produced a table to help employers value second hand bicycles:http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm
Finally, remember, to qualify as a tax free bicycle, it should be used mainly by the employee for travelling to work and on work related business, although other personal use is permitted. An expensive touring bicycle that is never used for work related journeys will not qualify for the tax exemption.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
Please complete our form
to request a callback
Competitive fixed quotes
for agreed services
Increase your profit and
reduce tax liabilities
Expert advice for your
business size
