How exactly does the tax benefit of bicycle leasing work?
How does bicycle leasing work via your employer?
With bicycle leasing, you as an employee rent a bicycle from your employer for a period of three or four years. This offers a lot of tax advantages and ease of use.
What does bicycle leasing entail?
Monthly payments: you pay off your bicycle rental each month with a part of your gross wage. This means there are no large one-off costs, but rather the costs are spread over the entire lease period.
Tax benefits: instead of your gross wage being taxed directly by the NSSO, taxes and employer contributions, you use the untaxed portion for bicycle leasing. This means the full amount goes directly to your bicycle.
Financial benefits
You retain a higher net amount: because you don't pay taxes on the portion of your wage that you use for your leased bicycle, your net income is only slightly lower than if you had the same amount of wage paid in cash.
Contribution to the bicycle: the amount that would otherwise go to taxes is now used for your leased bicycle.
What happens after the lease period?
Takeover option: at the end of the lease period, you have the option to take over your bicycle for a small amount (16% or 20% of the list price). You can find more details on this in your employer's Bicycle Policy.
Important tips
Check your Bicycle Policy: read your employer's Bicycle Policy for specific details on the lease period and the terms and conditions for taking over the bicycle.
Plan your budget: because you make monthly payments with your gross wage, it is important to understand the impact this will have on your financial situation.
Need more information?
Then be sure to check out this blog "Leasing or buying a bicycle: which is more advantageous?".
Do you still have some questions?
If so, feel free to contact our helpdesk. We will be glad to help you further.