CYCLE TO WORK SCHEME       It’s as simple as...

 

  1. Ask your employer to partake in the scheme- it has savings for them too
  2. Call into us to select a bike
  3. We fill out a quotation for you to give your employer
  4. Once they arrange payment, you can collect your bike and accessories

 

CYCLE TO WORK SCHEME TAX SAVINGS

 
COST OF BIKE & ACCESSORIES €250 €500 €1000
 
SAVINGS
 
HIGHER TAX RATE
 
41% TAX + 7% PRSI + 4% LEVIES= 52% €130 €260 €520
 
COST AFTER SAVINGS €120 €240 €480
 
NET COST OVER 12 MONTHS €10 €20 €40
 
BASIC TAX RATE
 
20% TAX + 7% PRSI + 4% LEVIES= 31% €77 €155 €310
 
COST AFTER SAVINGS €173 €345 €690
 
NET COST OVER 12 MONTHS €14 €28 €57
 
These figures are approximate and may vary subject to individual taxation.

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About the Scheme

On 1 January 2009 a new government scheme to encourage people to cycle to work came into force. The new bike scheme covers bicycles and accessories up to a maximum cost of €1,000. The bicycle must be purchased by your employer but the scheme can then operate either with your employer bearing the full cost of the bicycle, or by way of a salary sacrifice agreement (like the existing travel card scheme) in which you pay for it, tax free, over 12 months.

 

Participating in the bicycle scheme is easy. If your employer decides to take part, they simply buy the bike and equipment on your behalf and off you go.
The scheme is flexible in its application in that your employer doesn’t have to specifically notify the Revenue Commissioners that you’re availing of the scheme and there are no Government forms to fill out. However, your employer does have to maintain the normal records such as invoices and payment details associated with buying the bike.

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Employee Questions


Q. Cycle to work, what is it all about?
A. This is a Government initiative that enables your employer to buy a bicycle and bicycle accessories for you, without you being liable for benefit in kind taxation. For a tax payer at the top rate, this equates to a minimum saving of 41% on the cost of a new bike.
Q. What’s the purpose of the scheme?
A. The goal of the scheme is 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.
Q. What is covered in the scheme?
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
Q. Is there a limit to the amount I can spend on the bicycle and equipment?
A. Yes, if the total value of the purchases is over €1,000, the difference is subject to benefit in kind taxation.
Q. If I want to participate, is my employer obliged to get involved?
A. No, participation in the scheme is voluntary and it is up to your employer. However, where an employer does agree to implement the scheme, it must be offered to all employees on an equal basis.
Q. Who pays for the bicycle?
A. The bicycle must be bought by your employer. The scheme can then operate with either your employer bearing the full cost of the bicycle, or by way of a salary sacrifice agreement.
Q. How does the salary sacrifice operate?
A. Under a salary sacrifice arrangement, you agree to forego part of your salary every pay period to cover the cost of the bike and equipment provided by your employer. The amount of salary you sacrifice will be exempt from tax, employee’s PRSI and levies. It will also be exempt from your employer’s PRSI. The salary sacrifice arrangement must be completed within a maximum period of twelve months.
Q. Why can’t I buy more than one bike every five years?
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.
Q. Are 'electric bikes' covered under the scheme ?
A. Electric bikes (pedelecs) are eligibile for the scheme. These include a bicycles or tricycles which are equipped with a motor having a maximum power of 0.25 KW, with maximum assisted speed of 25 kph.

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Employer Questions

Q. What steps must I take to avail of the Cycle Scheme?
A. You must decide firstly, whether to participate in the scheme, which would involve offering bicycles and biking equipment to employees. These can be provided to the employee as a tax-exempt benefit of his/her employment or under salary sacrifice arrangements.
Q. How does the tax relief operate for employers?
A. The employer buys the bicycle and equipment on behalf of the employee without the employee being liable to taxation on the benefit-in-kind.
The employer can 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 levies on the value of the benefit received from the employer.
Q. What is the difference for the employee and employer between operating the salary sacrifice model and the benefit-in-kind exemption model?
A. Both models involve a benefit-in-kind exemption. However, where there is no salary sacrifice, the employer bears the entire cost.
Q. Is there a difference in monies saved or time over which the bike is paid for?
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.
Q. How will the exemption operate? What kind of documentation is required?
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).
Q. Am I liable to pay VAT on the bicycle? Can I claim an input credit in respect of the VAT?
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.
Q. How do employers obtain the monetary tax relief?
A. Where an employer implements the scheme, they will not account for employer PRSI on the amount of the benefit provided.

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