An optional ‘simplified’ approach to valuing cycles sold to employees after the end of a loan period is set out in a new paragraph EIM21667a of HMRC’s Employment Income Manual.
A technical note available via www.lexisurl.com/bZRPs discusses this and other tax implications of salary sacrifice arrangements involving cycles and bus passes.
EIM21667a explains that if a cycle is transferred to an employee after a period of use during which the benefit is tax-exempt under ITEPA 2003 s 244 that transfer may be taxable either as earnings (ITEPA 2003 s 62) or as a benefit in kind.
‘In either case as long as any payment that the employee makes for the cycle is equal to or more than the market value there will be no tax charge under the employment income rules. If the employee pays less than market value the difference will...
