Many companies include cycle to work schemes as part of their employee reward offering. Provided certain conditions are met, employees can be provided with a cycle and safety equipment without a benefit in kind charge arising. However, working from home during the COVID-19 outbreak has meant many individuals will be unable to meet the requirement that the equipment is used, mainly for qualifying journeys. In recognition of this, the Government has announced a temporary easement to the conditions which must be met.

What are the normal rules?

Employees can be provided with cycles and cycling safety equipment without any benefit in kind charge arising, provided that:

• Participation in the scheme is open to all employees;
• Employees do not become owners of the cycles and safety equipment provided; and
• The main use of those cycles and safety equipment is for journeys to or from the employee’s workplace in the performance of their duties (e.g. home to work travel or travel between workplaces).

How have these requirements been affected by the COVID-19 outbreak?

HMRC will usually accept that the ‘main use’ condition is met if more than half the cycling equipment’s use is for work related travel. However, the requirement to work from home where possible has meant that many individuals who participate in their employer’s cycle to work scheme, will be unable to meet the ‘main use’ condition in 2020/21. As the rules for the exemption currently stand, a benefit in kind charge would therefore arise in relation to employer provided cycling equipment for affected employees.

To avoid this, the Government is to introduce a temporary easement to the benefit in kind exemption for employees who, on or before 20 December 2020, joined a cycle to work scheme and were provided with a cycle and/or cycling safety equipment.

How will the easement work?

Employees who joined a cycle to work scheme on or before 20 December 2020 will not need to meet the ‘main use’ condition until 6 April 2022 in order to qualify for the exemption. However, these employees will be required to meet the ‘main use’ condition during 2022/23 and subsequent years to continue qualifying for the relief.

Employees who join a cycle to work scheme on or after 21 December 2020 will not qualify for this easement and must continue to meet all the normal rules for the exemption to apply.

For further information please contact :

• Caroline Laffey