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%

25%

18 months

16%

21%

2 years

13%

17%

3 years

8%

12%

4 years

3%

7%

5 years

Negligible

2%

6 years & over

Negligible

Negligible

 

How to use the valuation table


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