Press release: June 2008

"Get on your bike! It´s environmentally friendly, it´s good for the waistline and it´s also very tax efficient." With petrol prices continuing to rise too, pedal pushing is one of the top money saving tips from Essex and London-based accountants, LB Group.

One health conscious client, David Southgate, managing director of Rayburn Engineering, has taken them at their word. David, who lives in Heybridge, near Maldon, now regularly cycles the 20 miles each way to his workshop in Fordham, just outside of Colchester.

"Cycling into work saves me a lot of money and keeps me very fit. A typical journey to work by car takes me 40 minutes, but I can bypass all the traffic congestion and still be at work within 55 minutes if I travel in by bike!" he explained. "Nowadays lots of the big high street cycle retailers offer and administer cycle to work payment schemes, so it´s become quite easy for companies to offer this tax benefit to staff."

Magnus Baird, manager at LB Group´s Colchester office, said, "Not only are there health and environmental benefits to cycling, but the Government has made it very tax efficient too.

"The rules are very simple. If employers buy the push-bike and any safety equipment such as cycle helmets, etc. they can reclaim the VAT as usual and can also claim capital allowances to reduce their Corporation Tax liability," he said.

"It´s a very flexible but little known scheme that is aimed at reducing the environmental impact of motor transport," he added. "In fact, an employer can provide more than one bike, if for instance that enabled the employee to cycle to a railway station, take a train, and then cycle to the place of work."

"Better still, it´s not regarded as a taxable benefit in kind in the same way that a car would be provided the bicycle is owned by the company," Magnus explained. There are some qualifications though: the scheme must be available to all employees and the bike must be used mainly for journeys to and from the place of work."

As an alternative employers can provide a loan enabling staff to buy a bike or can pay up to 20p per mile tax free to employees who use their own bicycle for business travel.