Employment Income Manual updated for Cycle to Work Schemes in consideration of COVID-19

04 January 2021

HMRC has updated the Employment Income Manual to cover the main usage test which is applied for cycle schemes considering the impact that COVID-19 has had on thousands of employers requiring employees to now work from home. 

The update reads: 
"COVID-19 has changed working practices. Many employees who may have been provided with a cycle or cyclists’ safety equipment have increasingly been working from home. It may not, therefore, be possible for them to meet the ‘mainly for qualifying journeys’ condition necessary for this exemption to apply. 
 
Provided employees have joined a scheme, with a cycle or cyclists’ safety equipment provided to them on or before 20 December 2020, the qualifying journeys condition will not be applied until after 5 April 2022. 
 
Employees who have a cycle or cyclists’ safety equipment provided after 20 December 2020 will need to meet all the conditions for the exemption to apply" 

Ordinarily, for the provision of a cycle or cycle safety equipment to be exempt from tax, employees are required to meet the ‘mainly for qualifying journeys’ condition, however, with many employees now home working, the update will mean that those who were entered into a cycle to work scheme prior to the 20 December 2020, will now not need to meet this requirement. 

Employers should keep this deadline in mind, as typically benefits are negotiated or amended as the new tax year approaches. Any employee wishing to enter a cycle to work scheme after 20 December 2020 will be expected to meet all conditions necessary for the exemption to apply. 


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