EXPLANATORY NOTE

1. This clause exempts the benefit of cycles and cycling safety equipment provided by employers to employees for their commuting journey. It also introduces capital allowances for employees who use their own cycles for travel in carrying out the duties of their employment.

2. Together with the other reliefs being provided by clauses 45 and 46, this clause is aimed at helping the take up of green modes of transport by employers and employees.

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3. Subsection (1) brings in a new Section 197AC of the Taxes Act.

4. New Section 197AC(1) removes the benefits charge for a cycle or cycling safety equipment which is lent to the employee by the employer.

5. New Section 197AC(2) defines ‘cycle’.

6. New Section 197AC(3) and (4) make the exemption dependent on the equipment being available generally to employees and being mainly used for journeys between the employee’s home and the workplace.

7. New Section 197AC(5) provides that the exemption will still apply where the employer, instead of providing the equipment directly, provides a voucher for the individual to obtain it from someone else.

8. New Section 197AC(6) defines ‘employment’ and ‘workplace’.

9. Subsection (2) extends capital allowances to cycles used in performing the duties of the employment.

10. Subsection (3) provides that the reliefs will take effect from 6 April 1999.

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11. The benefit of a cycle lent by an employer to an employee for his commuting journey is a taxable benefit. This clause will remove the charge from 1999-20006 April 1999.

12. Where an employee uses his own cycle to travel in the performance of the duties of his employment, there is at present no relief for the proportion of the capital cost of the bicycle attributable to the business journeys. This clause will introduce relief for the capital cost along the same lines as applies to other machinery owned by an employee and used in the performance of the duties of an employment. Capital allowances will generally be due by reference to the proportion of the capital cost which the business cycling bears to the total cycling mileage in the year.

13. 13. In addition, and also with effect from 6 April 1999, the Inland Revenue will be introducing a tax-free business cycling allowance of 12p per business mile. So an employer will be able to pay an employee a tax-free amount of 12p per mile for each business mile; and where the employer pays less than this amount - or nothing at all towards the cost of business mileage - the employee will be able to claim tax relief on the difference up to 12p per mile.