More on tax-free bikes

[Clive George]

I'm now confused. I think I know what the rules are (bike belongs to
employer, should be used for qualifying journeys), but reading the relevant
act is confusing me.

http://www.hmrc.gov.uk/taxes_act_2002/vol_02/ictapt05/ictapt05a-38.htm

1) There is no charge to tax (etc).

(3) The exemption conferred by subsection (1) above is subject to the
condition that the employee must use the cycle or safety equipment mainly
for qualifying journeys.
(4) The exemption is also subject to the condition that the employee must
use the cycle or safety equipment only for qualifying journeys.
For this purpose "qualifying journey", in relation to an employee, means a
journey-
(a) between his home and workplace, or
(b) between one workplace and another,

in connection with the performance of the duties of the employment.

Why do these two exemptions appear to disagree? 3 says 'mainly for
qualifying journeys' - fair enough. 4 says 'only for qualifying journeys',
which appears to be a) wrong and b) directly contradicting 3.

Help! My brain is melting...

cheers,
clive

 

[David Martin]

Clive George wrote:
> I'm now confused. I think I know what the rules are (bike belongs to
> employer, should be used for qualifying journeys), but reading the relevant
> act is confusing me.
>
> http://www.hmrc.gov.uk/taxes_act_2002/vol_02/ictapt05/ictapt05a-38.htm
>
> 1) There is no charge to tax (etc).
>
> (3) The exemption conferred by subsection (1) above is subject to the
> condition that the employee must use the cycle or safety equipment mainly
> for qualifying journeys.
> (4) The exemption is also subject to the condition that the employee must
> use the cycle or safety equipment only for qualifying journeys.
> For this purpose "qualifying journey", in relation to an employee, means a
> journey-
> (a) between his home and workplace, or
> (b) between one workplace and another,
>
> in connection with the performance of the duties of the employment.
>
> Why do these two exemptions appear to disagree? 3 says 'mainly for
> qualifying journeys' - fair enough. 4 says 'only for qualifying journeys',
> which appears to be a) wrong and b) directly contradicting 3.

If you comply with 4 then you also comply with 3 so no direct
contradiction. My personal view now is that it is a politicians
delight, sounds great on the surface but with more strings attatched
than the London Philharmonic. So I am leaning on my Employer to go for
interest free loans which will avoid a number of the legal issues.
(though would the lack of interest be chargeable to tax?)

...d

 

[John Hearns]

On Wed, 21 Sep 2005 00:39:50 -0700, David Martin wrote:

>
> London Philharmonic. So I am leaning on my Employer to go for interest
> free loans which will avoid a number of the legal issues. (though would
> the lack of interest be chargeable to tax?)
When I worked at St. Thomas' the Special Trustees had a scheme for
interest-free tseason ticket loans, plus loans to buy a PC for home use.
As I recall these applied to both NHS and Uni staff.

I should explain that the Special Trustees are a charitable institution,
so are not directly the employers.

Do you have anything similar?

 

[Tony Raven]

David Martin wrote:
>
> (though would the lack of interest be chargeable to tax?)
>

Yes it would


--
Tony

"I did make a mistake once - I thought I'd made a mistake but I hadn't"
Anon

 

[Jon Schneider]

There's also legislation about tax-free breakfasts on cycle-to-work days.

As my own company director can I make every day a cycle-to-work day
even if I go downstairs at home for breakfast but cycle out to buy
food ?

If not it seems like discrimination against small companies.

Jon

 

[Ian Smith]

On Tue, 20 Sep 2005, Clive George <[email protected]> wrote:

> Why do these two exemptions appear to disagree? 3 says 'mainly for
> qualifying journeys' - fair enough. 4 says 'only for qualifying journeys',
> which appears to be a) wrong and b) directly contradicting 3.

The inland revenue guidance says that at least 50% of the usage of te
bike must be qualifying journeys. It doesn't specify an actual
minimum usage though, which I thought interesting - I'd qualify if I
road the bike to work once a year, as long as I rode it otherwise
no greater distance either.

Conversely, if I bought a bike and rode it into work every working day
for a couple of years, but then took a three month sabatical and
cycled round the world (or as far as I could get in three months) on
it I'd need to pay the taxman the tax, since I fail to qualify.

regards, Ian SMith
--
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[druidh]

Ian Smith wrote:
> On Tue, 20 Sep 2005, Clive George <[email protected]> wrote:
>
>
>> Why do these two exemptions appear to disagree? 3 says 'mainly for
>> qualifying journeys' - fair enough. 4 says 'only for qualifying journeys',
>> which appears to be a) wrong and b) directly contradicting 3.
>
>
> The inland revenue guidance says that at least 50% of the usage of te
> bike must be qualifying journeys. It doesn't specify an actual
> minimum usage though, which I thought interesting - I'd qualify if I
> road the bike to work once a year, as long as I rode it otherwise
> no greater distance either.
>
> Conversely, if I bought a bike and rode it into work every working day
> for a couple of years, but then took a three month sabatical and
> cycled round the world (or as far as I could get in three months) on
> it I'd need to pay the taxman the tax, since I fail to qualify.
>
> regards, Ian SMith
And who checks?

druidh

 

[iakobski]

ICBW, but I thought it gave two options - either most of the journeys
to work use the bike, or most of the use of the bike is journeys to
work.

Subtle difference, takes a minute to get your head round....

 

[[email protected]]

druidh wrote:
> Ian Smith wrote:
> > On Tue, 20 Sep 2005, Clive George <[email protected]> wrote:
> >
> >
> >> Why do these two exemptions appear to disagree? 3 says 'mainly for
> >> qualifying journeys' - fair enough. 4 says 'only for qualifying journeys',
> >> which appears to be a) wrong and b) directly contradicting 3.
> >
> >
> > The inland revenue guidance says that at least 50% of the usage of te
> > bike must be qualifying journeys. It doesn't specify an actual
> > minimum usage though, which I thought interesting - I'd qualify if I
> > road the bike to work once a year, as long as I rode it otherwise
> > no greater distance either.
> >
> > Conversely, if I bought a bike and rode it into work every working day
> > for a couple of years, but then took a three month sabatical and
> > cycled round the world (or as far as I could get in three months) on
> > it I'd need to pay the taxman the tax, since I fail to qualify.
> >
> > regards, Ian SMith
> And who checks?

AIUI IR guidance is that nobody should unless there is strong evidence
of egregious abuse

best wishes
james

 

[iakobski]

Yes you can do that, there's no discrimination. However, only six of
them are tax-free, any more will be classed as BIK.

And BTW - you might have trouble demonstrating how you cycled to work
down the stairs!

 

[Ian Smith]

On 22 Sep 2005 03:53:34 -0700, iakobski <[email protected]> wrote:

> ICBW, but I thought it gave two options - either most of the journeys
> to work use the bike, or most of the use of the bike is journeys to
> work.

Not in the latest guidance on the DFT website (so far as I can see).
It does say:

"The tax exemption only applies when an employee mainly uses the cycle
and cyclists' safety equipment for qualifying journeys. A qualifying
journey for an employee means a journey, or part of a journey, between
his or her home and workplace, or between one workplace and another,
in connection with the performance of their duties of employment. So,
for example, cycling to and from the station to get to work would
qualify. [In this case, 'mainly' means that more than 50% of time
using the cycle and safety equipment must involve a qualifying
journey."

(No, they don't have a closing bracket.)

regards, Ian SMith
--
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[iakobski]

Yes, you're right, it's not there any more, but I didn't make it up,
honest.

They probably took it down because it doesn't match what the law says,
but that doesn't normally stop HMRC and their own personal
interpretation of statute. But I digress.