Bike To Work

How It works?

•The scheme allows employer to provide an employee with a bicycle and/or cycle safety equipment without the employee being liable for benefit-in-kind taxation.

•The scheme may also be implemented under a salary sacrifice arrangement through the employee’s payroll (in a similar manner to the existing Travel Pass Scheme). Under such an arrangement, the employer provides the bicycle and/or safety equipment to the employee who agrees to forego or sacrifice part of his or her salary every pay period (weekly/fortnightly/monthly as the case may be), in order to cover the cost of the benefit. The full cost must be recovered within a maximum period of twelve months and the salary sacrifice will be reflected in the employee’s pay over that period.

•Bikes will be owned by the employees.

•Limit on the value of such purchases is €1,000 for each employee

•The exemption may only apply once in any five year period in respect of any employee.

•There will be no limits as to where the bike should be purchased.

•If employee is on the top rate tax and full €1,000 is spent, a saving of €415.90 is made and possibly more if the employee is still below the PRSI cut-off point.

•The employer will also benefit in that employer’s PRSI is not payable on the cost of the bicycle and/or safety equipment.

•Employers will not be permitted to purchase bikes for their employees where they do not believe that they will be used for cycling to and from work by the employees in question.

•Employers will not be able to reclaim the VAT paid on the bicycle and/or safety equipment.

•Participation in the scheme is voluntary for employers. However, when an employer agrees to participate, he or she must make the scheme generally available, on an equal basis, to all employees requesting it.


Qualifying safety equipment

•Cycle helmets which conform to European standard EN 1078

•Bells and bulb horns

•Lights, including dynamo packs

•Mirrors and mudguards

•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.

Conditions

•The bicycles and/or safety equipment must be purchased by the employer.

•The tax exempt benefit-in-kind for the bicycle and safety equipment will only apply where the employee agrees to use the bicycle to cycle to and from work or between workplaces.

•The tax exempt benefit-in-kind will be limited to €1,000. Where the cost exceeds this amount,a BIK charge will apply to the balance.

•Under any salary sacrifice arrangement, the cost of the bicycle and/or safety equipment must be paid within twelve months.

•The tax exempt benefit-in-kind may only be provided to an individual employee once in a five year period.

•Electric bikes are now eligible for the scheme.

•Employees should note that if they avail of the scheme for even a small amount of expenditure relating to the provision of bicycles and/or safety equipment, they will not be able to avail of it again for five years.


© Mike Carey 2016
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