Saving money by cycling (tax incentives)

Mids_Costcutter

Official MoneySavingExpert.com note:

MoneySaver Mids_Costcutter has kindly offered his wisdom on the perks being a cyclist can provide, both for cyclists and their employers, together with links for more info Thanks Mids_Costcutter!!

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I wrote the article below for my local cycle campaign group. Please let me know if you find it useful or if anything's missing.

Regular commuter cyclists already know that cycling is a good deal cheaper than running a car, but are employers aware of how cycling can save them money? As part of its “Green Travel” agenda, the Government has in recent years started offering incentives via the tax system to encourage cycling. Here is a round-up of the benefits that qualify for tax relief:

• Cycle to Work scheme: employers can loan bicycles to their staff as a tax-free benefit on the condition that the bicycles are mainly used to get to and from work or for work-related purposes. The employee ‘buys’ the bike at the end of the loan period for a nominal sum. The typical saving on a new bike plus equipment for an average taxpayer is between 38-45 %.

• Business mileage rate: employers can pay staff 20p/mile tax-free for using their own bicycle for business travel. Higher payments will be subject to tax. Nevertheless, many employers do pay a considerably higher mileage allowance and the money can be an obvious inducement to travel by bike. If your employer does not pay a mileage allowance for business travel by bicycle, a deduction from your tax can be claimed from your tax office.

• Workplace cycle parking: an employer will not pay tax or National Insurance Contributions on the cost of providing parking equipment.

• Cyclists’ breakfasts: the employer may provide a free meal or refreshments at up to six cyclists' breakfasts per year, as long as they are provided on designated "cycle to work" days. This benefit would then be exempt from tax.

• Pool bicycles: if an employer provides an employee with a bicycle and safety equipment which is used for work purposes the employer will not pay tax or National Insurance Contributions on these costs.

Of course there are a number of other ways in which increasing cycling results in real savings for an employer:

• Cyclists don't get held up by unpredictable traffic and are more likely to arrive at work on time.

• Car parking problems can be eased - one car parking space will accommodate 8-12 bikes, therefore making more efficient use of limited land space. Department for Transport research indicates that the annual cost of running a car parking space is between £300 and £500.

• A healthier and more productive workforce - cyclists take fewer sick days than non-cyclists. A recent Cycling England report puts the cost of physical inactivity to employers through increased absence at £47.68 per inactive person per year. Inactivity also imposes significant costs on the NHS.

• Company bikes are cheaper and easier to maintain than company cars. It's often quicker to get across town by bike than by car e.g. for a meeting.

• Cycling reduces air and noise pollution. Showing a sound environmental policy can improve a company's image and therefore be good for business.

Further information:

Pool bikes / workplace parking: http://www.hmrc.gov.uk/green-transport/travel-plans.htm
A Fact Sheet for Employers setting up Green Travel
Plans

Cyclists’ breakfasts: http://www.hmrc.gov.uk/
manuals/eimanual/eim21664.htm EIM21664 – Particular
benefits: exemption for bicycles and cyclists'
meals or refreshments

Cycle to Work scheme: http://www.bikeforall.net/
content/cycle_to_work_scheme.php

Costs of physical inactivity to employers:
http://www.cyclingengland.co.uk/
Valuing the benefits of cycling, A report to Cycling England, May 2007

mh1923

A healthier and more productive workforce - cyclists take fewer sick days than non-cyclists. A recent Cycling England report puts the cost of physical inactivity to employers through increased absence at £47.68 per inactive person per year. Inactivity also imposes significant costs on the NHS.

I'm not convinced that the causality is quite this simple. Healthy people are more likely to choose to cycle than unhealthy people.

afoxeloni

Mids_Costcutter wrote: »

Official MoneySavingExpert.com note:

• Cycle to Work scheme: employers can loan bicycles to their staff as a tax-free benefit on the condition that the bicycles are mainly used to get to and from work or for work-related purposes. The employee ‘buys’ the bike at the end of the loan period for a nominal sum. The typical saving on a new bike plus equipment for an average taxpayer is between 38-45 %.

I've had 2 new cycles over a 3 year period via this method.Signed up with the halfords bikes2work/cycle2work scheme via my employer.
Weekly/Monthly payments are deducted before tax etc, thus making a saving for you.
With the scheme I also got a further 15% of accessories free.
E.G £500 cycle.....£75 accessories

UTAH001

My employer ran the scheme with Halfords as well, but it was really poorly received by us staff. After all, if you want to buy a good quality bike for commuting you hardly want to deal with a spotty saturday boy at Halfords!

They launched the scheme again in July with a company called Cycle Solutions (www.cyclesolutions.co.uk). They offer a real quality choice of bikes and the advice they give can't be beaten.

Our HR department were very impressed as they saw 10 times the number of employees taking up the scheme on the second launch.

jiblets1

My husband tried to get involved in this, but we got the impression it's only in England. Do any of the incentives apply to Wales?

Mids_Costcutter

jiblets1 wrote: »

My husband tried to get involved in this, but we got the impression it's only in England. Do any of the incentives apply to Wales?

HM Revenue & Customs cover the whole of the UK, so I don't see why the tax benefits shouldn't apply also in Wales. What gave you the impression that it was only for England?

Mids_Costcutter

mh1923 wrote: »

I'm not convinced that the causality is quite this simple. Healthy people are more likely to choose to cycle than unhealthy people.

Thanks for your view MH, but correspondingly aren't regular cyclists (or anyone with an active lifestyle) also likely to stay healthy by continuing to cycle? A sort of virtuous circle?

UTAH001

Hi Jiblets

I have done a bit of digging around and it looks, from their web site, like Cycle Solutions are actually based in Swansea!

My company has offices in london, manchester, Leeds, Bristol, Cardiff and Glkasgow. A mate of mine in Glasgow said he was chuffed to bits with the brand new Specialized bike he got through the scheme. So I guess the scheme must be available all over.

jiblets1

Excellent! I shall get him on it. He is a teacher, so I assume the LEA or school will need to be signed up to the scheme.

A friend living in Bristol told us of the scheme and we looked into it and I was sure that the website we looked at kept saying England, so we assumed it was England only.
This is good news

laurmurph

jiblets1 wrote: »

Excellent! I shall get him on it. He is a teacher, so I assume the LEA or school will need to be signed up to the scheme.

A friend living in Bristol told us of the scheme and we looked into it and I was sure that the website we looked at kept saying England, so we assumed it was England only.
This is good news

Since the scheme works by 'sacrificing salary' teachers are usually excluded from the scheme because of their national contract/terms&conditions. He'll need to speak to the HR dept at the LEA. They may be running for all other staff than those on teaching contracts. Good Luck though - it's an excellent scheme i saved nearly £300 off a bike over £600 from a small independent bike shop.

ysoskint

Please Can someone explain to me SIMPLY how you go about getting a bike. I am running out of time. I went to halfords, young boy gave me advise and then gave me a busienss card with a price written. Who do i take that too??? How do i get the vochure??