Has any employer temporarily withdrawn your cycle to work scheme as a result of lockdown (employees not travelling to work and therefore potential change to the tax position)? We do not intend to for several reasons but I would like to benchmark it. Thank you in advance and my apologies if this has already been asked.
Hi Rebecca,
Thank you for your question about the tax position of cycle to work schemes in relation to whether newly home-based employees will still qualify for the salary sacrifice scheme given the criteria is that 50% of usage must be for commuting.
REBA approached Caroline Harwood, partner, head of employment tax and share plans at Crowe UK for her view on this issue. Please see her response below:
"One of the criteria that must be met for Cycle to Work salary sacrifice to attract tax and NICs relief is that at least 50% of the cycle’s use must be for qualifying journeys, i.e. commuting to work. Clearly during lockdown this won’t be the case for all workers. At the present time, there has been no relaxation of this rule as a result of the Coronavirus pandemic despite the Government’s promotion of cycling to work to reduce reliance on public transport as lockdown is eased. However, the 50% criteria is set across the year, so it may be possible for the employees to make up for this proportion of qualifying journeys later in the tax year.
"To be aware, the HMRC guidance states that “Employees are not expected to keep detailed records of time spent cycling or miles travelled for the purpose of this ‘main use’ test.” Further, HMRC officials are instructed to “Accept that the test is satisfied unless there is clear evidence to suggest that less than half of the use of the cycle or equipment is on qualifying journeys.” Therefore, when assessing whether the employees can make up for the qualifying journeys in other parts of the year, detailed records from the employees are not required to be kept or provided.
"Therefore, while it is extremely difficult to predict when workers will be returning to work (and this will clearly depend on the employer’s sector, geography etc.) the tax year is relatively young so the employer should consider whether they believe it will be likely that employees might be able to make up the 50% following any return to work before deciding whether to cancel the scheme."
We are also now looking at re-opening our window but was wondering if the availability of bikes has been an issue.
Thank you everyone. Those of you offering the scheme to employees working from home, have you taken advice on whether this changes the tax position ?
We had a window opening in the last 6 weeks so we decided to go ahead. We've had a better take up than ever, and increasing the limit also helped.