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Tax easement for cycle-to-work schemes impacted by COVID

18 December 2020: Employees that joined a cycle-to-work scheme on or before 20 December 2020 will not be liable for income tax benefit-in-kind charge, reveals Treasury.

A written statement from the Financial Secretary to the Treasury to parliament on 17 December, announced that the government will introduce a temporary tax easement on cycle-to-work schemes.

Such schemes benefit from a tax exemption on the provision of bicycles and safety equipment to staff, provided that they are used “mainly for qualifying journeys”, ie into and out of work.

The Treasury have acknowledged that government-imposed restrictions to combat the coronavirus pandemic has meant that many employees have been required to work from home and not been able to make the qualifying journeys to work. This means that the equipment they received no longer meets the tax exemption requirements and is liable for an income tax benefit-in-kind charge.

To prevent this, the government is temporarily removing the ‘qualifying journeys’ condition for employees who joined and received their cycling equipment on or before the 20 December.

The tax easement will remain in place until 5 April 2022.