Cycle to Work scheme

Cycle to Work scheme

Cycle to Work scheme is a UK Government annual tax exemption initiative introduced in the 1999 Finance Act to promote healthier journeys to work and to reduce environmental pollution. It allows employers to loan cycles and cyclists' safety equipment to employees as a tax-free benefit. The exemption was one of a series of measures introduced under the Government's Green Transport Plan. A Cycle to Work scheme does not require the prior approval of HMRC.

On 6th August 2010 HMRC issued a statement to clarify the fair market value, which should be charged if the employees want to take ownership of the bike at the end of the repayment. The full statement including the matrix is available here: http://www.hmrc.gov.uk/manuals/eimanual/eim21667a.htm Some of the providers have always recommended continued use at no further charge as the best option to avoid any additional cost and remain within the scheme guidelines.

Recently some concerns have developed with regards to the employer reclaiming VAT on the salary sacrifice vouchers, however, its impact on the Cycle to Work scheme is yet unclear. An update from HMRC is expected shortly. Please click here for more details

Contents

Who is eligible

Employers of all sizes across the public, private and voluntary sectors can implement a tax exempt loan scheme for their employees. The employees wishing to participate should be paid through the PAYE system. The scheme is not available to the self-employed or employees on the National Minimum Wage.

What equipment is included under the tax exemption

Eligible equipment includes cycles and cyclists' safety equipment. The tax exemption defines a "cycle" as 'a bicycle, a tricycle, or a cycle having four or more wheels, not being in any case a motor vehicle'. An electrically assisted pedal cycle can be included under the scheme.

Cyclists' safety equipment is not similarly defined in the legislation and a common sense approach should be taken to the equipment provided.

What value of equipment can be supplied

There is no limit on the total value of the equipment including the cycle. It is possible to loan two cycles to one employee if, for example, that employee needed a cycle at either end of a train journey between their home and place of work. However please note, that the Office of Fair Trading (OFT) has advised that the group consumer credit licence will cover schemes up to a value of £1,000. To extend that, an additional credit licence is required.

How does it work

The exemption removes the tax charge that would otherwise apply to cycles and cyclists' safety equipment loaned to employees provided the following conditions are met:
- Ownership of the equipment is not transferred to the employee during the loan period;
- Employees use the equipment mainly for qualifying journeys;
i.e. for journeys made between the employees home and workplace, or part of those journeys (for example, to the station), or for journeys between one workplace and another
- The Cycle to Work scheme is made available generally to employees of the employer concerned and not confined to directors or offered to them on more favourable terms.

How to set it up

To take advantage of the tax and Class 1A NICs exemption, an employer can simply buy a cycle and cyclists' safety equipment, reclaim the VAT (if applicable), make use of the capital allowances and loan it to an employee for qualifying journeys to work. This arrangement means that the employee's normal salary arrangements are not affected. It may be, however, that the employer wants to recover the cost of providing the cycle and safety equipment loaned to the employee. Usually this would be done through a salary sacrifice arrangement.

Cycle to Work Alliance

Some of the biggest scheme providers have recently started Cycle to Work Alliance, a legal group to represent the interests of the scheme providers and users in negotiations with HMRC.

References

- Scheme Guidelines
- Department for Transport
- HMRC - Salary Sacrifice - [1]


Wikimedia Foundation. 2010.

Игры ⚽ Поможем написать реферат

Look at other dictionaries:

  • Work hardening — Work hardening, also known as strain hardening or cold working, is the strengthening of a metal by plastic deformation. This strengthening occurs because of dislocation movements within the crystal structure of the material.[1] Any material with… …   Wikipedia

  • Segregated cycle facilities — A bike lane on the side of a highway. Utrecht has specially painted …   Wikipedia

  • Snowy Mountains Scheme — The Snowy Mountains Scheme is a hydroelectricity and irrigation complex in south east Australia. The waters of the Snowy River and its tributary, the Eucumbene, are captured at high elevations and diverted inland to the Murray River and the… …   Wikipedia

  • Marie de' Medici cycle — The Marie de Medici Cycle is a series of twenty four paintings by Peter Paul Rubens commissioned by Marie de Medici, wife of Henry IV of France, for the Luxembourg Palace in Paris. Rubens received the commission in the autumn of 1621. After… …   Wikipedia

  • Citric acid cycle — Overview of the citric acid cycle The citric acid cycle also known as the tricarboxylic acid cycle (TCA cycle), the Krebs cycle, or the Szent Györgyi Krebs cycle[1] …   Wikipedia

  • Kilkenny Central Access Scheme — (CAS), previously Kilkenny Inner Relief Road Scheme, is sections of new road, improvement of existing roads and junctions, and a new River Nore bridge crossing, with provisions for footpaths and cycle lanes throughout. CAS comprises 4.5… …   Wikipedia

  • Staged combustion cycle (rocket) — Staged combustion rocket cycle. Usually, all of the fuel and a portion of the oxidizer are fed through the pre burner (fuel rich) to power the pumps. An oxygen rich circuit is possible also, but less common because of the metallurgy required. The …   Wikipedia

  • France — /frans, frahns/; Fr. /frddahonns/, n. 1. Anatole /ann nann tawl /, (Jacques Anatole Thibault), 1844 1924, French novelist and essayist: Nobel prize 1921. 2. a republic in W Europe. 58,470,421; 212,736 sq. mi. (550,985 sq. km). Cap.: Paris. 3.… …   Universalium

  • Bicycle-friendly — describes policies and practices which may help some people feel more comfortable about traveling by bicycle with other traffic. The level of bicycle friendliness of an environment can be influenced my many factors resulting from town planning… …   Wikipedia

  • Ocean thermal energy conversion — Temperature differences between the surface and 1000m depth in the oceans Ocean Thermal Energy Conversion (OTEC) uses the difference between cooler deep and warmer shallow or surface ocean waters to run a heat engine and produce useful work,… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”