Tax Benefits to Bike-in-a-Bag
Employer :
20p PER MILE CYCLED - From 6 April 2002, a statutory system of tax and National Insurance-free mileage rates for employees' business journeys in their own vehicles applies (ICTA 1988, s. 197AD-197AH and Sch.12AA). The statutory system replaces the existing system of Revenue authorized mileage rates. Separate rates apply for cars, vans, motorbikes and bicycles. This means that an employer can pay an employee who uses their own bike up to 20p per business mile cycled and the payment is tax free. In the context of this definition, 'business travel' is any travel the expenses of which, if incurred and defrayed by the employee out of the emoluments of his employment, would otherwise be deductible under ICTA 1988, s. 198 (relief for necessary expenses) (ICTA 1988, Sch. 12AA, para. 2). For the avoidance of doubt, an employee buying a bike could not claim capital allowances in respect of the expenditure but the employer can pay the employee to use the bike on business journeys.
FREE Breakfast!
Employers can also encourage cycling to work by offering a free breakfast on up to 6 occasions each fiscal year. The terms of this provision are that after 6 April 2002, the provision of qualifying meals to those employees cycling to work on a designated day ceases to be a taxable benefit. A qualifying meal is any food or drink which is provided to employees for consumption on arrival after cycling to work on the designated day. A designated day is a day that has been nominated by the employer as a day on which a qualifying meal will be provided by the employer to an employee cycling to work. The number of qualifying meals for each employee is limited to the first six in any year of assessment.
It pays for itself in about 3 Weeks!!
WAssuming you have to travel 2 miles into the congestion zone and because of the complexity of your trip, it is impractical to use public transport. The journey is likely to cost £5 by taxi, if you can find one. On this basis your Bike-in-a-Bag will pay for itself in just 18 days. If you drive in and pay the £8 congestion charge the payback period is between 2 and 4 weeks, when you add in fuel costs, wear and tear and parking.
Either way Bike-in-a-Bag gives you options:- depending on whether you want to save money, or not if the weather is bad, or if there are hold-ups, strikes or if the clock didn't go off again and you are late.
Notes to Employers / Employees
Please note that Bike-in-a-bag, or associated trading companies, are not authorized
to financial or tax advice and we advise that you do not rely on any information
provided herewith. You should employ the services of a regulated adviser.