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Biking tax free

November 2008

There are a number of formal "tax-free bike schemes" which have been developed in response to the Government's "Green Transport Plan".

Basically your employer buys a bike and hires it to you until you have paid back its full cost.

The tax break is facilitated because you pay for the bike by agreeing to reduce your monthly/weekly salary, before tax and NIC is deducted. Paying in this way you can meet your repayments out of your pre-tax rather than post taxed income.

This can translate to almost a 50% cash discount on the price of a new bike. Higher rate tax payers will benefit more from the scheme.

The scheme only applies to employees, if you are self-employed the bike could probably be claimed as a business expense, if you use it for business purposes.

Hilton Sharp & Clarke