On 17 December 2020, Jesse Norman, The Financial Secretary to the Treasury, issued a statement regarding an easement of the cycle to work guidance for participants that enrolled during the summer:
Easement for employer-provided cycles exemption
The tax exemption for the employer provision of cycles and cyclist’s safety equipment was introduced to support employers in promoting healthier journeys to work and to encourage green commuting. Many employers offer this in the form of Cycle to Work schemes.
One of the conditions of the exemption is that the cycling equipment provided should be used mainly for qualifying journeys (to or from work or in the course of work).
The Government’s COVID-19 restrictions have required many employees to work from home where possible. Therefore, many existing users of the scheme are not travelling to work and may be unable to meet the condition for qualifying journeys. Under the current application of the rules, these individuals would become liable to an income tax Benefit in Kind charge.
However, the Government will introduce a time limited easement to disapply the condition which states that cycles must be used mainly for qualifying journeys. The easement will apply to existing users and will allow those individuals to continue to benefit from the tax exemption without needing to meet the qualifying journeys condition.
The easement will be available to employees who have joined a scheme and have been provided with a cycle or cycling equipment on or before 20 December 2020. The easement will be in place until 5 April 2022, after which the normal rules of the exemption will apply.
Therefore, employees who have joined a scheme and have been provided with a cycle or cycling equipment on or before 20 December 2020, will be permitted to an easement, and will not have to meet the qualifying journeys condition until 5 April 2022. Employees who join a scheme from 21 December 2020 will need to meet all the normal conditions of the exemption.
Find the official advice here.
In summary:
- The Government will introduce a time limited easement [...] to disapply the condition which states that cycles must be used mainly for qualifying journeys
- The easement will be available to employees who have joined a scheme and have been provided with a cycle or cycling equipment on or before 20 December 2020
- The easement will be in place until 5 April 2022, after which the normal rules of the exemption will apply
- Employees who join a scheme from 21 December 2020 will need to meet all the normal conditions of the exemption
Cyclescheme's comment:
Cyclescheme welcomes the temporary guidance easement from the government.
The easement confirms that the Government supports the principle that employees working from home and using scheme equipment for exercise and/or utility journeys remain eligible for the cycle to work tax exemption. Furthermore, with the mass roll out of the vaccine giving us an optimistic outlook beyond spring, we believe that employees obtaining a bike via the scheme in the coming months will be able to satisfy the 50% commuting requirement over the total duration of their Hire Period.
At Cyclescheme, we take confidence from this announcement and believe that the easement timeframes will be updated as needed to reflect this new or any additional lockdowns. This is a positive and pragmatic step by the government and provides reassurance to employers that their workforce can continue to utilise the scheme.