Cycle to Work Scheme: implementation guidance

To promote healthier journeys to work and to reduce environmental pollution, the
1999 Finance Act introduced an annual tax exemption, which 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. These guidelines clarify how organisations can take advantage of the exemption to implement a Cycle to Work scheme that encourages employees to cycle to work and allows them to reap the benefits of a healthier workforce.

The notes are for guidance only and reflect the tax position at the time of writing and the law as it relates to the provision of consumer credit. The tax exemption refers to cycles and cyclists’ safety equipment loaned to employees by employers.

However, where salary sacrifice arrangements are used, Cycle to Work schemes must be regulated hire agreements between the employer and the employee. The terms ‘hire’ and ‘loan’ are therefore both used in these guidelines.