There is a general requirement for cycle to work scheme bikes and equipment to be used mainly for commuting or business journeys (qualifying journeys).
Many people began working from home for the first time during the lockdown restrictions introduced in March 2020. The government helpfully suspended the qualifying journey requirement for bikes provided to employees on or before 20 December 2020. However, the requirement came back into force from 6 April 2022.
This means that someone who works from home may be faced with a tax charge on the benefit in kind of being provided with a cycle. There are a few options available to the employee, by arrangement with the employer:
- If the employee cycles to the office at least one day a week, then depending on how much they use the bike elsewhere, it is possible they will now use the bike mainly for qualifying journeys.
- The employee could purchase the bike from the employer. HMRC publish rates which are relatively generous (i.e. low values) which the employee must pay for the bike.
- The employee could give up the bike which the employer may then have to sell (don’t forget to charge VAT if you’re VAT registered).
If the employee and employer do nothing, simply having a bike owned by the company yet working full time from home will lead to a benefit in kind tax charge. This is likely to be less tax efficient than the employee buying the bike (point 2 above).
Please get in touch if you would like to discuss this further.