Cycle To Work Scheme
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Cycle To Work Scheme
This scheme allows for the purchase of new bicycles and safety equipment for your employees. Items purchased under the scheme are not a taxable benefit-in-kind(BIK).
The scheme was introduced on 1 January 2009 to help lower carbon emissions and to assist people to lead a healthier more sustainable lifestyle. Under the scheme employers can pay for bicycles and bicycle equipment for their employees and the employee pays back through a salary sacrifice arrangement of up to 12 months.
The scheme is not mandatory but is an option for businesses who feel they could benefit from offering this option to their employees. Once offered the scheme needs to be offered to all employees without exception.
https://www.citizensinformation.ie/en/money_and_tax/tax/income_tax_credits_and_reliefs/cycle_to_work_scheme.html
https://www.revenue.ie/en/employing-people/what-constitutes-pay/items-not-treated-as-pay/provision-of-bicycles-for-directors-and-employees.aspx
Under the Scheme employers can, once in a period of 5consecutive tax years pay for new bicycles and bicycle equipment for their employees up to €1,000 without it being treated as a taxable benefit in kind. The employee then pays it back through a salary sacrifice arrangement of up to12 months.
Example:
Bicycles purchased in 2009 and 2010
Qualify again in 2014 & 2015, ( the year the bike is provided is counted as the first year),
Purchase of the following new safety equipment is also covered:
- Cycle helmets which conform to European standard EN 1078
- Bells and bulb horns
- Lights, including dynamo packs
- Mirrors and mudguards to ensure that the rider’s visibility is not impaired
- Cycle clips and dress guards
- Panniers, luggage carriers and straps to allow luggage to be safely carried
- Locks and chains to ensure cycle can be safely secured
- Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs
- Reflective clothing along with white front reflectors and spoke reflectors
Tax Relief:
The employee is not liable for tax, PRSI or the Universal Social Charge on their repayments and the employer also benefits as they are not required to operate employers PRSI on the cost of the bike and safety equipment (helmets, locks, lights etc). Your employer does not have to take part in the scheme. However if they do, they must offer it to all employees.
The bicycle and/or safety equipment must be used by the employee or director mainly for qualifying journeys. This means the whole or part (e.g. between home and train station) of a journey between the employee’s or director’s home and normal place of work or between the normal place of work and another place of work. The employer will be required to obtain a signed statement from the employee or director that the bicycle is for his or her own use and will be used mainly for travel to and from work or between places of work.
Where Revenue become aware that the bicycle was not used by the employee himself/herself or was not used for qualifying journeys the relief granted can be clawed back by way of end of year review.
Should you wish to discuss any of the topics highlighted in this article please do not
hesitate to contact DBASS on 01- 849 88 00 were a member of our team will be
delighted to assist you.
