Everyone knows that a (usually middle aged male) banker likes a bike. Just ask Tanneguy Marie De Carne, SocGen’s London-based global head of high yield capital markets, who got into a high speed chase with police around London on his, or Franck Triolaire, the former head of inflation trading at Morgan Stanley, who spend four months cycling around the French Alps. Cycling has the advantage of being a functional form of exercise and relaxation: “‘I cycle because it takes pressure off when I leave work,” De Carne told the British courts. It also offers the potential to spend huge amounts of money on an expensive piece of kit.
Following today’s autumn statement from the UK Chancellor of the Exchequer, London bankers have good reason to demand that they’re paid partly in the form of titanium framed bikes and high-end biking accessories. While Chancellor Philip Hammond cracked down on tax free benefits in kind like mobile phones, he made sure any benefits accrued to employees through the existing cycle to work scheme remain tax free.
For anyone unfamiliar with it, the scheme covers cycles and cyclists’ safety equipment. Cycles are defined as: ”a bicycle, a tricycle, or a cycle having four or more wheels, not being in any case a motor vehicle’ and can include electric bikes. Each employee is allowed two cycles: one for different legs of his/her journey. The government’s guidance says cycling equipment can include the following items:
Most importantly, it says there is: ‘There is no limit on the total value of the equipment including the cycle.’
If the scheme has one (major) downside, it’s that the bikes can only be loaned, not actually given to employees. At the end of the loan period, an employee can choose to buy the bike (often for far less than the original cost), but if the bike is sold to the employee at below its second hand market value, the employee will be taxed on the difference. Banks, meanwhile, can write off the cost of the scheme as capital expenditure and claim capital allowances.
One option for bankers looking to pay less tax is clearly to rent a succession of expensive bikes (and equipment) tax free. Another might be to rent and then buy bikes of uncertain resale value (which can be sold on at a minimal price). Either way, there may be a lot more bankers riding around the City and the home counties on fancy bikes in future. Cometh the men in Lycra.