Readers’ forum: Bicycles for employees

I act for a company that employs many staff and they have operated a cycle to work scheme for six years. The company buys the bikes makes a salary deduction hire charge to the employees over a three-year period and then at the end of this time the employee can either buy the bike or it is sold to a third party.

I asked my client about VAT and his answer was very logical: ‘We don’t claim input tax on any expenses for the bike including its purchase price so don’t need to account for output tax on the income. It is a private scheme for the employees.’

The client also advised me that the company pays for a corporate gym scheme membership which means a local gym can be used free of charge by any manager or director of the company. He has...