Bicycle leasing brings with it many tax benefits
Bicycle leasing is not about one specific tax benefit. Rather, the government has put in place several measures to encourage companies and their employees to cycle to work. Want to know all the tax benefits from bike leasing? Here we go…
1. Bicycle leasing is tax deductible
If your employees use a company bicycle for their commute or work-related trips, the lease price of the bike is 100% tax deductible. This means, as a company, you can reduce your taxable income, and therefore pay less tax.
Did you know, other associated costs, such as installing showers, changing rooms, bike storage facilities or charging station infrastructure are also 100% deductible? All the more reason to keep those lease bicycles coming!
2. Recoup VAT
What about VAT? Recouping of VAT is determined by specific bicycle use:
- VAT is deductible only for the percentage that the bike is used on purely work-related travel.
- Consequently, this deduction does not apply to private use.
- What’s more, you cannot recoup VAT on the cost of any leased commuter bike.
3. Lower social security contributions
By offering bicycle leasing as an employer, you will benefit from a reduction in social security contributions. In fact, bike usage is subject to an exemption. As a result, employer’s contributions fall considerably. Makes sense, right?
What’s more, as a company, you will benefit from an exemption on employer’s contributions for employees who lease a bicycle. This is because the lease is not factored into the employee’s salary, meaning it is not considered a benefit in kind, either. The result? A lower employer’s contribution, and therefore significant savings.
4. Parking cost savings
With bicycle leasing, you also have less parking-associated costs. Ever calculated how much parking space you save on per employee cycling to work? Plus, all that freed-up space can be used to install proper bike storage or extra green space. What’s more, this too is 100% tax-deductible, as well as being an environmentally conscious decision!
Did you know that your employees also enjoy numerous tax benefits from leasing a bicycle? Find out more in our blog post ‘Why does leasing a bicycle through your employer offer so many tax benefits‘.
Interested in bicycle leasing for your organization?
Want to know how you can introduce tax-friendly bike leasing within your company? Schedule a meeting with one of our Bike Lease Experts. Together, we will put together a cycling plan tailored to your organisation!