There are special rules involving bicycles usually referred to as ‘Cycle to Work’ arrangements. The Cycle to Work scheme was introduced almost 20 years ago to help promote the use of healthy ways to commute to work using an environmentally friendly mode of transport. Employers of all sizes across the public, private and voluntary sectors are eligible to take part in the scheme with the proviso that no employees or groups of employees are excluded. Note that the Cycle to Work scheme cannot be used if in doing so this would reduce an employee’s gross pay below the National Minimum Wage.The scheme allows employers to provide (technically loan) bicycles and cyclists’ safety equipment (worth up to £1,000) to employees as a tax-free benefit. Where the scheme conditions are satisfied employees can benefit from a tax and National Insurance Contribution (NIC) reduction of between 32% and 42% through a salary sacrifice scheme. In addition, there is no employer liability to NICs.What happens at the end of the loan period?The Cycle to Work benefits only relate to the loan period, however, it is commonplace for an employer or a third party bicycle provider to offer the employee the bicycle / equipment they have been using for sale after the loan period has ended. The bike may be offered to the employee for sale at a fair market value, but this must be done as a separate agreement.Like to set up a "Cycle to Work" scheme for your business?If the above scheme is something you’d like to consider for your business please call for more information.