Can I Claim Bicycle as a Business Expense?

Bicycles benefit from some of the most favourable tax treatment of any work-related asset. Whether you use the Cycle to Work salary sacrifice scheme, buy a bike through the company for business travel, or simply claim mileage for cycling to client meetings, there are genuine tax savings available.

The Cycle to Work scheme is the most well-known route. Under this scheme, your company purchases a bicycle and safety equipment, and you hire it through a salary sacrifice arrangement. You give up a portion of your gross salary to cover the cost, saving income tax and National Insurance on the sacrificed amount. For a 40% taxpayer also saving 2% employee NI, the total saving is 42% of the bike's cost. A £1,000 bike effectively costs you £580. The original scheme was capped at £1,000, but since 2019 there is no formal cap, though your scheme administrator may impose one.

For company directors, Cycle to Work can be set up relatively easily, even for single-director companies. The company buys the bike, you enter into a hire agreement, and you sacrifice salary over 12-18 months. At the end of the hire period, you can purchase the bike from the company at fair market value (HMRC guidance suggests 18% of original price for bikes over £500 after a 3-year period, or 25% after a 1-year period).

Alternatively, if you use a bicycle mainly for business travel, the company can provide it as a tax-free benefit. The condition is that the bike is used mainly (over 50%) for qualifying travel, which includes commuting. This is an important distinction: unlike cars, cycling to work counts as qualifying use for the tax exemption. The bike, safety equipment, and cycling clothing can all be provided tax-free under ITEPA 2003, s244.

Bicycle mileage is claimed at HMRC's approved rate of 20p per mile for business journeys. This is a surprisingly generous rate relative to the running costs of a bicycle. If you cycle to a client meeting 5 miles away, you can claim £1 each way. While individual claims are small, regular cycling to business appointments adds up over a year.

Safety equipment provided alongside the bicycle, including helmets, lights, reflective clothing, and locks, is also exempt from BIK when provided as part of a cycling provision for business or commuting use.