SE21664 - Benefits: exemption for bicycles and cyclists' meals or refreshments

Section 197AC ICTA 1988 and S.I. 2002 No. 205

If an employer lends or hires bicycles or cyclists safety equipment to employees the benefit of this is exempt from Schedule E tax 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 ( SE21850). 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. The exemption does not apply if the ownership of the bicycle or equipment is transferred to the employee.

Free meals or 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 and such meals are a taxable benefit in kind. This tax charge may discourage employees from taking part so with effect from 6 April 2002 regulations (S.I 2002 No. 205) exempt from tax up to six cyclists' breakfasts per year, as long as they are provided on "cycle to work" days.