As an employer, you can easily implement a tax exempt loan scheme for employees. To qualify for the tax exemption, the loan of bicycles and safety equipment must be available to all employees.
Employers who purchase bicycles and safety equipment for loan to employees (up to £1,000) can benefit from treating the purchase as capital expenditure eligible for corporation tax relief. VAT can also be claimed back on the purchase unless you are registered on the VAT flat rate scheme.
The loan of bicycles and safety equipment under the cycle to work scheme removes any tax charge to the employee that would usually arise on a taxable benefit.
To be eligible for the tax exemption and to comply with the Consumer Credit Act 1974 the agreement must be a hire agreement and not a hire purchase agreement.
Ownership of the bicycles and safety equipment must remain with the employer for the duration of the loan. The employer can offer the employee the right to purchase at the end of the loan agreement for fair market value.
The bicycle and safety equipment must be used primarily for work purposes, so for travelling to and from the workplace.
The following safety equipment is allowed: