There are widely know health benefits associated with cycling, however, less widely known are the tax benefits available to companies and employees.
From 100% corporation tax relief to tax free payments for each mile you ride, you could lose more than just a few inches off your waistline by hitting the road on a bike!
As an employer the government encourages you to benefit form a healthy workforce. As such if you provide bicycles for your employees, this is exempt from tax if certain conditions are met:
the cycles or equipment are available generally to all employees of the employer
the employees must use the cycle or equipment mainly for qualifying business journeys.*
* Other use of the cycle, 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.
In lay terms this means you can purchase a company bike, as long as that bike is available to all staff, and the cost of purchase would be an allowable expense for corporation tax, saving you 20% of the purchase price, whilst also being exempt as a Benefit In Kind, avoiding any additional tax charge to the company and employee.
Eventually you may wish to transfer the bike out of the company and to you personally, there are specific rules around this, however if you plan correctly, this tax incentive is a clear winner should you harbour ambitions of commuting to work on bicycle.
Should you already have two wheels, and you simply start to use those for business journeys, there is another tax benefit which can seem to good to be true! Tax Free Cash! That’s not a phrase you often hear, however under the approved mileage allowances, you can claim a whooping 20 pence for each mile travelled.
Take an average inner London commute of say 5 miles that would equate to nearly £500 per year of tax free income, saving a basic rate tax payer and company around £224 in combined tax and NIC.
Let F9 trim your tax liabilities while you trim your waist! Contact us today to discuss what we can do for you.