HMRC has devised and published a simpified valuation method for an employer to use when it transfers the ownership of a bicycle to an employee.

Providing an employee pays his employer the market value of the cycle at the date of the transfer no taxable benefit arises (there is no NICs charge either). If the employee is given a cycle or pays less than market value the difference between market value and the price (if any paid) is taxable as employment income.

To assist employers in the task of valuing cycles HMRC has introduced a valuation table:

Age of cycle

Acceptable disposal value percentage


Original price of the cycle less than £500

Original price £500+

1 year



18 months



2 years



3 years



4 years



5 years



6 years & over




How to use the valuation table

  • The original price of the cycle is the price for which it was on sale as new at the time when it was first provided to the employee. In salary sacrifice arrangements this price may be clearly referred to in the documentation. Cycles are normally acquired by employers at arm’s length from unconnected persons and where this is the case, either of the following can be accepted as the original price of the cycle:
    • the amount that the employer paid or was invoiced for the cycle or
    • the retail price of the cycle that was taken into account in working out any hire payments.
    • It is acceptable to use the VAT exclusive amount in calculating the original price of the cycle. However, where the valuation percentage is applied to a VAT exclusive amount, VAT will need to be added to the result in order to arrive at the acceptable market value. This must be done regardless of whether or not the employer is VAT-registered. For example, if the original price net of VAT was £400, then whilst the VAT rate is 17.5%, the acceptable` market value at 2 years old will be £61. ((£400 x 13%) + (VAT at 17.5% x £52) = £52 + £9 = £61).

Note: This guidance is solely about a simplified method of calculating the value of used cycles in the context of taxable employment income and is not intended to have any bearing on the actual VAT position. Employers will need to refer to the appropriate guidance or seek advice on how to account for VAT on sales of used cycles.

In calculating the original price of the cycle, include safety equipment fitted to the cycle (such as lights and bells) but not safety equipment which would be worn by the cyclist (such as helmets or reflective clothing). Where used regularly for commuting and/or travel between workplaces, safety equipment worn by the cyclist is likely to have a market value that is lower than the table percentages for a cycle and cycle-based safety equipment.

Source: HMRC Employment Income Manual para EMI21667a