Bicycles And Bicycle Safety Equipment
*Subject to necessary Treasury regulations
Normal Averaging Method - Introduced in 1995 as an alternative to calculating the benefit strictly in accordance with the prescribed official interest rates. Initially the average interest rate was set in advance by HMRC, but must now be calculated by the employer. The chargeable value is assessed by comparison of the average loan rate (calculated by reference to the periods during which different rates are in force between the start and the end of the tax year) with HMRC’s approved rate. From April 2017, where the loan is made as part of a salary sacrifice, or other remuneration arrangement the Optional Remuneration Arrangement (OpRA) rules apply and the reportable amount is the higher of the interest saved and the cash foregone. COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS Annual average interest rate charge on beneficial loans from 2000/2001 to date Date from % Date from % Date from % 2000/2001 6.25 2006/2007 5.00 2015/2016 3.00 2001/2002 5.94 2007/2008 6.25 2017/2018 2.50 2002/2003 5.00 2008/2009 6.10 2019/2020 2.50 2003/2004 5.00 2009/2010 4.75 2004/2005 5.00 2010/2011 4.00 BICYCLES AND BICYCLE SAFETY EQUIPMENT Hired (or loaned) to employees, not sold to them, to cycle to work are exempt from tax (and class 1A NICs) provided: • the offer of such facilities is open to (though not necessarily used by) all employees, this includes those aged under 18 and those close to national minimum or living wage • the cycle is used primarily, no records are required, for ‘qualifying’ journeys (i.e. home to workplace, workplace to temporary workplace). For guidance this means not less than 50% of the use of the cycle. Other use of the cycle such as occasional use by members of the employee’s family would not disqualify the exemption provided the main use is for ‘qualifying’ journeys. Where ownership of a bicycle is transferred to an employee after a period of use as a benefit, there is no tax charge as long as the market value at date of transfer is paid by the employee - HMRC provide a matrix of acceptable residual values see http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm . No printing, copying or r production permitted. 2005/2006 5.00 2014/2015 3.25 FromApril 2017, this exemption from Income Tax applies even if the bicycle and safety equipment
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