The exemption removes the tax charge that would otherwise apply to cycles and cyclists' safety equipment loaned to employees provided the following conditions are met. 

Under the tax exemption, eligible equipment includes cycles (bicycle, a tricycle, or a cycle having four or more wheels, not being, in any case, a motor vehicle' (192(1) of the Road Traffic Act 1988 (c.52)) and cyclists' safety equipment which can include:

• Cycle helmets which conform to European standard EN 1078
• Bells and bulb horns
• Lights, including dynamo packs
• Mirrors and mudguards to ensure riders visibility is not impaired as well as Cycle clips and dress guards
• Panniers, luggage carriers and straps to allow luggage to be safely carried
• Child safety seats
• Locks and chains to ensure cycle can be safely secured
• Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs
• Reflective clothing along with white front reflectors and spoke reflectors

Employers can choose what safety equipment is offered, but they may wish to consult their local tax inspector on whether the equipment they offer falls within the tax exemption.

The maximum value of the equipment including the cycle is £1000 as stipulated by the consumer credit licence.

The tax exemption requires:

• Ownership of the equipment is not transferred to the employee during the loan period;  
• Employees use the equipment mainly for qualifying journeys; i.e. for journeys made between the employee’s home and workplace, or part of those journeys (for example, to the station), or for journeys between one workplace and another.  
• The offer of the use of a loaned or provided cycle is available across the whole workforce, with no groups of employees being excluded.
• The tax exemption only applies when an employee mainly uses the cycle and cyclists' safety equipment for qualifying journeys including a journey, or part of a journey,  between his or her home and workplace, or between one workplace and another
• An employer may loan cycles and cyclists' safety equipment to all employees but a salary sacrifice arrangement cannot be used if in so doing the employee's gross pay drops below the NMW.

Please note, Reward Gateway does not provide tax advice and the above information is publicly available through the relevant HMRC channels.

More information can be found on the HMRC website and in this HMRC Cycle to Work guidance document.