EIM21664 – Particular benefits: exemption for bicycles and cyclists' meals or refreshments

Section 244 ITEPA 2003, S.I.2002 No. 205 and S.I.2003 No. 1434

If an employer lends or hires bicycles or cyclists safety equipment to employees the benefit of this is exempt from tax on employment income if the following conditions are satisfied:

• the bicycles or equipment are available generally to all employees of the employer (this does not mean that every employee has to be provided with a bicycle or equipment, just that the offer of bicycles or equipment is open to all employees if they wish to take it up) and
• the employees must use the bicycle or equipment mainly for qualifying journeys. 'Qualifying journeys' means the same as for the works bus exemption (see EIM21850). Other use of the bicycle, for instance pleasure use or use by members of the employee's family will not disqualify the exemption provided that the other use is not the main use of the bicycle.

Employees are not expected to keep detailed records of time spent cycling or miles travelled for the purpose of this 'main use' test. Accept that the test is satisfied unless there is clear evidence to suggest that less than half of the use of the bicycle or equipment is on qualifying journeys. If it is clear that there is substantial use of the bicycle for qualifying journeys, do not make special enquiries about the extent of any other use.

The exemption also covers the provision of a voucher for hiring bicycles and equipment.

If ownership of the bicycle is transferred to an employee after a period of use as a benefit, the cost of the benefit is the market value at the date of transfer. This is different from the general rule when assets are transferred after a period of use as a benefit ( EIM21650).

Free meals and refreshments provided to cyclists on "cycle to work" days

Some employers designate a few days each year as "cycle to work" days. In order to encourage employees to participate the employer may provide a free meal or refreshments. Under general principles such meals are a taxable benefit in kind but regulations exempt them from tax, as long as they are provided on designated "cycle to work" days.