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HMRC internal manual

Employment Income Manual

Particular benefits: exemption for bicycles: how exclusion of employees affects availability condition

Section 244 ITEPA 2003

EIM21664 explains that one of the conditions that must be satisfied in order for the exemption for loaned cycles to apply is that cycles are available generally to all employees of that employer.

There are some limited circumstances in which an employee might be excluded from the offer of availability of a cycle without the exemption being affected.

Examples of the sort of limited exceptions from cycle provision that would not prevent the exemption from applying include the following:

  • Exclusion of employee who is employed on a casual or temporary basis for a very short period and it is not possible for an employer to process that employee’s cycle request (either for a cycle under salary sacrifice arrangements or for access to, say, a pooled cycle) before the employment has ceased. The length of time this takes may vary between employers but where the period of employment is no more than 3 weeks you can accept such an assertion without further enquiry.
  • Exclusion at certain times of an individual engaged on a “zero hours” contract. Under such contracts, employers are not committed to provide employees with work and employees are not committed to accepting work. Accordingly, there may well be periods under a zero hours contract where the employee is not providing any services to the employer. The exclusion of zero hours employees from provision of a cycle during such periods would not prevent the exemption from applying. And nor would the exemption be prevented from applying where a zero hours contract employee who only works for a short period of time (as in the preceding bullet) is not offered a cycle.
  • Exclusion of individuals who are not actually employed by the employer, such as work experience school students.
  • Exclusion of employees who are incapable of using a cycle.

Examples of exclusions from cycle provision that would prevent the exemption from applying include the following:

  • Exclusion of temporary employees (except for where periods of employment are very short or casual as outlined above)
  • Exclusion of employees simply because they are in their probationary period
  • Exclusion of employees who are able to use a cycle but who may not be able to choose to use a cycle to commute. This category may include, for example, employees who use a motor vehicle to transport equipment and employees for whom living accommodation is provided at the workplace. The exclusion of employees who cannot opt to commute by cycle from the offer of a cycle would prevent the exemption from applying. However, as long as cycles are available generally to employees, the provision of cycles to some employees who cannot meet the condition about the type of journeys for which the cycle is used, will not prevent the exemption from applying to those employees for whom the usage condition is satisfied.
    For example, an employer has 100 employees and offers to make loaned cycles available to any of those employees who apply. 30 employees take up the offer and for 28 of them, the main use of the cycle is from home to work. The other two are not able to use the cycles for travelling to work or between workplaces and therefore do not qualify for exemption. But their failure to use the cycles for qualifying journeys has no impact on the tax treatment of the other employees and therefore the provision of the cycles still qualifies for exemption from tax for the other 28 employees.

See EIM21666 for more information about what counts as making a cycle available to an employee.