CYCLE TO WORK SCHEME
Any person that availed of the Cycle to Work Scheme from January to December 2009 can now avail of a new bicycle on the scheme from January 2014
Section 118B(2)(a)(iii) TCA 1997 includes the provision of a bike under Revenue approved salary sacrifice agreements and makes reference to a bike provided to an employee etc which is exempt from tax by virtue of Section 118(5G)(c) TCA 1997. As discussed, in accordance with section 118(5G)(c) TCA 1997 which contains the 5 year rule in relation to the provision of a bike, the exemption from tax may not be availed of more than once in any period of 5 consecutive tax years, commencing with the year of assessment in which the director or employee is first provided with the bicycle or bicycle safety equipment.
Therefore, it is when the bike is provided rather than when salary sacrifice commences or ceases that dictates when the employee can again avail of the scheme, e.g. if the employee is provided with a bike in January 2013 or December 2013, the provision would be available again from the 1st of January 2018 ( 2018 tax year) as a period of 5 consecutive tax years is done.
Basically what the above is saying, is that if a company opened the scheme in the 2009 tax Year, no matter when they opened in that year, their staff can avail of a new bike from January 2014
The Cycle to Work scheme applies to any Employee whose Employer has agreed to participate in the scheme.
- The Employee calls to the bicycle store to select their bicycle and accessories up to a maximum value of €1,000 any amount above this must be paid by the Employee.
- The Employee will receive an invoice from the retailer for the goods selected which is then given to the Employer.
- The Employer pays the bicycle retailer.
- The Employee receives their bicycle and accessories.
Employee on the standard rate of tax: Bicycle Price €300.00 Saving €100.00 on the Scheme, Actual Cost €200.00 Deducted weekly from wages over 52 weeks @ €3.85
Employee on the higher rate of tax: Bicycle Price €300.00 Saving €150.00 on the Scheme, Actual Cost €150.00 Deducted weekly from wages over 52 weeks @ €2.88
Costs included can be used as a guide only, and may vary subject to personal taxation.
Civil Service & Public Sector. Application forms.
Teachers and all staff on the Department of Education and Science payroll. Application forms.
The Department of Education are now accepting applications for the cycle to work scheme. Employees can now apply at any time of the year. Circular letter 36/2011
A. This is a Government initiative that enables your employer to pay for a bicycle and bicycle accessories for you, without you being liable for benefit in kind taxation.
A. The goal of the scheme is to encourage more employees to cycle to and from work. As well as reducing traffic congestion and lowering carbon emissions, more people cycling to work will improve health and fitness levels.
A. In addition to the bike, the scheme covers a range of equipment such as helmets, lights, locks, bells, mirrors, cycle clips, panniers, luggage carriers & straps, pumps, puncture repair kits, cycle tool kits, reflective clothing and reflectors
A. Yes, the limit covered by the scheme is €1,000
A. The bicycle must be paid for by your employer.
A. The tax relief on the cost of a bicycle and equipment is allowed once in each period of five years. This reflects what would be regarded as a reasonable lifespan for a bike.
A. There will be no minimum amount of days a bicycle should be used. However, the bicycle must be used mainly for journeys to and from work or between work places
A. There will be no notification process involved but the purchase of bicycles and associated equipment by employers for employees will be subject to the normal Revenue audit procedure with the normal obligations on employers to maintain records (e.g. delivery dockets, invoices, payments details, salary sacrifice agreements between employer and employee, signed statements from employees that the bicycle/bicycle safety equipment is for own use and will be used for travelling to and from work).
A. You require an invoice from the bicycle retailer and signed statements from employees that the bicycle/bicycle safety equipment is for own use and will be used for travelling to and from work. This invoice will be subject to the normal Revenue audit procedure with the normal obligations on employers to maintain records with no notification process involved with Revenue.
A. The employer, having decided to participate in the scheme, pays for the bicycle and equipment on behalf of the employee without the employee being liable to taxation on the benefit-in-kind.
The employer can also implement the scheme according to a salary sacrifice arrangement. This would involve the employee agreeing to forego or sacrifice part of his or her salary in each pay period in order to cover the cost of the bicycle and equipment. Under the scheme, any salary sacrifice arrangement must be completed within a maximum period of twelve months.
The employer saves on employer’s PRSI on the value of the benefit (up to €1,000) provided to the employee. The employee saves on income tax, employee’s PRSI and income levies on the value of the benefit received from the employer.
A. Whether the scheme is implemented in a particular employment by way of a BIK-exempt benefit from the employer to the employee, or by way of a salary sacrifice agreement between employer and employee, the amount of tax, PRSI and levies saved by the employer and employee is exactly the same in both cases. However, where salary sacrifice agreements are entered into between the employer and the employee, the arrangement must last for a maximum period of twelve months.
A. Yes, VAT is payable. The employer will not be able to claim an input credit in respect of the VAT payable as the bicycles will not be used for the purposes of taxable supplies.
A. No. An employee can only avail of the exemption once in every 5 years. It does not matter that he or she may have been exempted from a benefit-in-kind charge for an amount less than €1,000. The exemption is available once in every 5 year period.
A. Where an employer implements the scheme, they will not account for employer PRSI on the amount of the benefit provided. For example, if a bicycle to the value of €500 is provided to the employee, there would normally be a liability on the employer to submit 10.75% of this value, i.e. €53.75, to the Revenue Commissioners as part of their returns. The Cycle to Work scheme now exempts the benefit from employer PRSI and the €53.75 will not have to be returned.