tax relief on bike purchase in budget?

copacetic

Now that we have the various green cyclists in power what do people think are the chances of a tax relief scheme coming in December?
Was it part of the green manifesto?

The bike to work scheme in the uk seems to have been relatively sucessful, and I think it would work here or at least get more people considering cycling to work.

Since you can get tax relief on bus and rail tickets it seems obvious that you should be able to do the same on the greenest mode of transport.

P_1

Interesting idea but probably won't stand a chance given our car loving government (FF)

mikemac

Interesting idea.

Here's some info on the UK scheme-some big savings to be had
http://www.chainreactioncycles.com/Information.aspx?TranslationLargeID=34

1. The Employer buys the Bicycle from Chain Reaction Cycles.

2. The Employer can claim back the VAT on the purchase.

3. The VAT free price of the Bicycle is divided by 12 and this amount is deducted from the Employees monthly salary via a Salary Sacrifice. Throughout these 12 months the employee is leasing the bicycle from the employer. The Employee is making additional savings as they will not pay any Income Tax or National Insurance on the amount of Salary reduction.

4. At the end of the 12 months hire agreement, the Employer may ‘sell’ the Bicycle to the Employee for an agreed fee.


CRC Price £900.00
Accessories £100.00
Total Goods £1000.00
Vat claimed -£148.93
Cost to Employer £851.07

Tax Savings 40% £340.40
National Insurance saving 1% £8.51
Cost to Employee £502.52

Manone

Nice idea. Can't imagine we will see this in any time soon. I hate to be cynical, but I did have to swerve off the bicycle lane in front of TD Eamonn Ryan the other day up around Clonskeagh, so not sure how bike loving they are. He was driving a Hiace or a van of some sort, so at least it wasn't a big petrol gussler.

I can't imagine the Greens will get too close to Cowen's sweeties anyway (although, they'll probably turn out to be sour apples).

Gavin

I thought Ryan cycles in ?

copacetic

I'm actually quite hopeful on this, it wouldn't cost much and would suit the greens to trumpet their input in government. However I checked and it isn't in their manifesto.

Victor

Verb wrote: »

I thought Ryan cycles in ?

He does, I saw him about a fortnight ago. He runs / ran the bike shop in Belfield.

Fabio

Tax relief on bikes is a great idea I think. I doubt that the Greens will be able to persuade FF to introduce that though...

Capt'n Midnight

Tax relief on companies providing bike parking - they can offset the costs against other profits
allowing people to claim mileage on bikes like they can for cars for journeys around town
stiffer penalties for bike thieves, make it the same as stealing a car and provide more places to lock bikes, better if covered from rain . One great deterent to using bikes is parking, you want to see your bike dry and undamaged when you get back.

Manone

Not saying he doesn't cycle to work, just that I had to swerve the other day by Richview in Clonskeagh to avoid him.

I agreed with the last post (to stay on point) there are plenty of things that can be done without going near the budget, but the bike scheme would be a firm commitment.

It would be a pleasant surprise if it did come in and maybe the tax relief can inlude good waterproof gear aswell.:)

copacetic

yay!

Bunnyhopper

copacetic wrote: »

yay!

Fair dues

Any ideas about the lottery numbers for this week?

skapegoat

How will this work in the public sector?
I dont think Bryan Cowen and i will skip into a bycycle shop with me and buy me a 1000e bike......Although I may of had a dream about it?

It would be nice to see a cyle lane on the N4, that road is a death trap!
Also could they clean the glass off the few cycle lanes they have? so many punctures.:mad:

They should have Taken vat off helmets and made it illegal to cycle without one.

Anyway Bryan, if your reading this i would not mind a nice Giant OCR please!

skapegoat

Oh and for annyone who missed it,

Cycle to work scheme From 1 January 2009, the provision of bicycles and associated safety equipment by employers to employees who agree to use the bicycles to cycle to work will be treated as a tax exempt benefit-in-kind. The exemption may only apply once in any five year period in respect of any employee. There will be a limit on the value of such purchases of €1,000 for each employee. The scheme may also be implemented via salary sacrifice arrangements, whereby an employee agrees to forego part of his/her salary to cover the costs associated with the purchase of the bicycle and associated safety equipment. Where such salary sacrifice arrangements are implemented, they must be completed over a maximum period of twelve months.

The estimated cost of this scheme is €0.2 million in 2009 and €0.4 million in a full year.


Thats 200 bikes up for grabs.....

MagicMarker

skapegoat wrote: »

Thats 200 bikes up for grabs.....

You don't get a free bike, you get a bike and protective equipment up to the value of 1000 euro tax free.

Anyone know how much tax you pay on these kind of things normally?

skapegoat

I can read too,:)
I would say 21.5% vat, would really like to see the fineprint on this.
Its a nice incentive.

MagicMarker

I wonder, is the 1000 euro budget include the that?

As in, say you want to buy a 1200 euro bike (which would be less than 1000 after the exemption), would this be allowed?

TinyExplosions

It's not the VAT that you save, it's the amount of tax you would have paid on the money... for example, if you're in the 40% bracket, you save 400 quid, if you're in the lower one, you'll save 200 quid. Not sure if you can get a bike for more than a grand and pay the full difference, but we'll see I guess!

Bunnyhopper

skapegoat wrote: »

They should have Taken vat off helmets and made it illegal to cycle without one.

Yes to the first part of that: to the second, no way, absolutely not (and I speak as someone who always wears a helmet when cycling, and has done so for the last 18 years, near enough).

(But I think I hear the sound of a can of worms being opened so it might be best to leave it at that.)

SetOverSet

skapegoat wrote: »

...the provision of bicycles and associated safety equipment by employers to employees who agree to use the bicycles to cycle to work will be treated as a tax exempt benefit-in-kind.

+1 TinyExplosions

I really don't think you will simply be able to purchase a new bike duty free. As I understand it, and I'm open to correction here, where your employer provides you with a bike and associated safety equipment which you agree to use to cycle to work, you will not be taxed on this benefit in kind, as you would say a company car.

Lumen

It should also effectively be VAT free, I think, if purchased by your employer, since they can claim the VAT back.

Since the cost to them is essentially the VAT-free price, presumably that means the bike can be priced at €1000+VAT before you incur tax.

However, it is difficult to reclaim VAT from another EU country (my business doesn't bother) but you can persuade some companies to not charge VAT on the transaction, provided that you supply VAT reg number - it can be a bit complicated though, depending on country.

This means, I think, that if your employer could persuade Wiggle to supply a bike VAT-free, you could get a Z65 tax-free (although it would cost your employer just under a grand).

If said employer could be persuaded to substitute this for (say) €1k of year-end bonus, you'd end up with a very nice bike for the equivalent of under €600 in your pocket (as a higher rate tax payer).

As stated before, I am not an accountant.

blorg

SetOverSet wrote: »

+1 TinyExplosions

I really don't think you will simply be able to purchase a new bike duty free. As I understand it, and I'm open to correction here, where your employer provides you with a bike and associated safety equipment which you agree to use to cycle to work, you will not be taxed on this benefit in kind, as you would say a company car.

That is effectively it- the only other addition to it is that there is an option of salary sacrifice, so in effect you can pay for the bike yourself out of your pre-tax salary; you don't have to persuade your employer to "give" you a bike.

sparkman

Sorry for being thick but I've no idea how this will actually work:
From 1 January 2009, the provision of bicycles and associated safety equipment by employers to employees who agree to use the bicycles to cycle to work will be treated as a tax exempt benefit-in-kind. The exemption may only apply once in any five year period in respect of any employee. There will be a limit on the value of such purchases of €1,000 for each employee. So I go to my employer and give him a receipt for my new bike for 999 euro, and it gets refunded to me somehow thru my wages?
The scheme may also be implemented via salary sacrifice arrangements, whereby an employee agrees to forego part of his/her salary to cover the costs associated with the purchase of the bicycle and associated safety equipment. Where such salary sacrifice arrangements are implemented, they must be completed over a maximum period of twelve months. No idea what this means. This just sounds like I pay for it all myself. where is the benefit to the cyclist here?

Lumen

blorg wrote: »

That is effectively it- the only other addition to it is that there is an option of salary sacrifice, so in effect you can pay for the bike yourself out of your pre-tax salary; you don't have to persuade your employer to "give" you a bike.

Yes, but you must persuade your employer to buy the bike, regardless of whether the employer recoups through salary.

dub_skav

To be honest I don't think you'll be allowed to buy the bike online. It would make no sense, the government have a lot of things they need to sort out, one of them being keeping small businesses afloat and encouraging spending within ireland. To allow you to buy a bike from a foreign owned company would be both stupid on their part and possible political suicide

Lumen

dub_skav wrote: »

To be honest I don't think you'll be allowed to buy the bike online. It would make no sense, the government have a lot of things they need to sort out, one of them being keeping small businesses afloat and encouraging spending within ireland. To allow you to buy a bike from a foreign owned company would be both stupid on their part and possible political suicide

I assume you mean "located abroad" rather than "foreign owned". I doubt they will make any such provision. Protectionism is generally counter-productive in the long term.

If they want to support Irish bike sales they could just ask An Garda to focus on things other than bike theft.

Oh, hang on....

markpb

I can't see this scheme working. I think it's a great idea (although enforcing proper construction standards for cycle lanes would be vastly more useful) but people who have bikes (and don't cycle) get no benefit, companies won't want the bother of dealing with it (much like the bus/train taxsaver scheme) and people will find it too much hassel to actually use it. But they'll be able to to clap themselves on the back and say they're "promoting" cycling.

blorg

Lumen wrote: »

Yes, but you must persuade your employer to buy the bike, regardless of whether the employer recoups through salary.

Yes, indeed, and experience in the UK suggests that some employers aren't arsed with the administrative work even though it results in no direct monetary cost to them (indeed it saves them a bit on PRSI.)

Stark

sparkman wrote: »

The scheme may also be implemented via salary sacrifice arrangements, whereby an employee agrees to forego part of his/her salary to cover the costs associated with the purchase of the bicycle and associated safety equipment. Where such salary sacrifice arrangements are implemented, they must be completed over a maximum period of twelve months. No idea what this means. This just sounds like I pay for it all myself. where is the benefit to the cyclist here?

It sounds like the money for the bike gets taken off your salary before tax. So you pay less tax on the remainder of your salary.

blorg

markpb wrote: »

I can't see this scheme working. I think it's a great idea (although enforcing proper construction standards for cycle lanes would be vastly more useful) but people who have bikes (and don't cycle) get no benefit, companies won't want the bother of dealing with it (much like the bus/train taxsaver scheme) and people will find it too much hassel to actually use it. But they'll be able to to clap themselves on the back and say they're "promoting" cycling.

The company hassle is a concern but the scheme has been running for some time quite successfully in the UK. Bike shops in the UK have been quite active/aggressive in promoting the scheme in the UK as it is in their interest. Halfords are here and probably the biggest supplier on the UK scheme; I just hope here that some of the LBSes here can get going on it and not leave the scheme to them. Possibly on some sort of federation or association level they could promote it.

Employees may need to take the initiative but it is worth their while for a saving in the region of 50% (40% income tax+21% VAT.)

copacetic

blorg wrote: »

The company hassle is a concern but the scheme has been running for some time quite successfully in the UK. Bike shops in the UK have been quite active/aggressive in promoting the scheme in the UK as it is in their interest. Halfords are here and probably the biggest supplier on the UK scheme; I just hope here that some of the LBSes here can get going on it and not leave the scheme to them. Possibly on some sort of federation or association level they could promote it.

Employees may need to take the initiative but it is worth their while for a saving in the region of 50% (40% income tax+21% VAT.)

agreed, saying it is no good because employers and/or employees can't be bothered to make use of the scheme is not a valid argument.

The scheme will support people buying new bikes and will encourage more people to try cycling to work.

Lumen

Actually, I don't see why you couldn't buy the bike yourself and claim back on expenses.

As long as the cost to the company is less than €1k, it won't affect your tax.

And again, if your employer can reclaim the VAT, it's probably €1k net.

penexpers

blorg wrote: »

Employees may need to take the initiative but it is worth their while for a saving in the region of 50% (40% income tax+21% VAT.)

You'll also save PRSI.

blorg

penexpers wrote: »

You'll also save PRSI.

Yes, and more to the point so will your employer (12%), hopefully giving them a small incentive to take part (presuming it is the same as the UK scheme.)

I must say, well done to the Greens, a lot of us here have been saying "wouldn't it be great if we had a bike to work scheme like the UK" and hey, now we have it.

Next up, de-mandatorise cycle lanes

dub_skav

Lumen wrote: »

I assume you mean "located abroad" rather than "foreign owned". I doubt they will make any such provision. Protectionism is generally counter-productive in the long term.

You are correct of course good sir.

unionman

blorg wrote: »

Next up, de-mandatorise cycle lanes

Or just scrub them. Spend the money on cycle education / awareness programme instead.

rflynnr

Stark wrote: »

It sounds like the money for the bike gets taken off your salary before tax. So you pay less tax on the remainder of your salary.

Not quite. Here's an example which, for sake of clarity assumes PAYE is the only income tax we pay.


Rider A earns €50k per annum. The first €1830 of this is tax free. Earnings from €1830 to €35,400 are taxed at 20% and the sum over €35,400 is taxed at 41%.

20% of €33750 (€35,400 - €1830) is €7080
41% of €14,600 (€50,000 - €35,400) €5986

Total PAYE bill: €13,066

HOWEVER

Under the new scheme, Rider A convinces their employer to buy a €1000 bike on their behalf, agreeing to pay their employer back over the course of 12 months through direct salary deductions. This expense become tax exempt. In other words RIDER A's taxable salary effectively drops to €49,000. And as a result their total PAYE bill falls thus:

20% of €33750 (€35,400 - €1830) is €7080
41% of €13,600 (€49,000 - €35,400) is €5576

Total PAYE bill: €12,656 (or a tax saving of €410 which constitutes the incentive)

(Incidentally I'm not saying this is definitively how the scheme will work. Rather, this is the most likely scenario based on the rather sparse paragraph of information included in the Budget Statement. Details of the scheme probably won't be finalised until the Finance Act where such policies are given more detail.)

penexpers

rflynnr wrote: »

Total PAYE bill: €12,656 (or a tax saving of €410 which constitutes the incentive)

But 410 is 41% of 1000?

penexpers

Just found out that my work are "almost guaranteed" to be taking part in the scheme, however it works out.

rflynnr

penexpers wrote: »

But 410 is 41% of 1000?

That's correct. (I'm not entirely sure if you're really asking me a question here.)

rubadub

They should just scrap VAT on bikes. Much easier than all this pissing about.

It is still probably going to be cheaper to buy from the UK anyway.

If it was just VAT exempt I might go for the bike here, but it is the same gain at the end of the day, ~21%. But the pain of dealing with my accounts dept would certainly put me off!

The higher earners get more off, which is not really fair, and most will probably just be getting the high end bike for a monthly spin and still drive the SUV to work.

How much lost time/money in red tape is all this going to cost companies & the gov administration for it?

Also if all bikes were VAT exempt you might see more kids cycling to school, and then it snowballs. I expect the main reason is to get traffic off road. But also casual non commuters could do with VAT free bikes, if the gov is serious about the obesity problem. Could even have a good effect on our own economy, not only will more buy within Ireland, but UK people could possibly import a cheaper bike from here, our Gov would get no VAT, but at least jobs in bike shops would get a boost.

All exercise equipment should be exempt IMO.

Chips Lovell

Just had a quick look at some of the measures from Gormley's carbon budget today. €5 million allocated to upgrade Dublin's bike paths. Let's see what they regard as an upgrade.

Stark

It would be sickening if they built more of those on-footpath things...

Lumen

rubadub wrote: »

They should just scrap VAT on bikes. Much easier than all this pissing about.

It is still probably going to be cheaper to buy from the UK anyway.

If it was just VAT exempt I might go for the bike here, but it is the same gain at the end of the day, ~21%. But the pain of dealing with my accounts dept would certainly put me off!

The higher earners get more off, which is not really fair, and most will probably just be getting the high end bike for a monthly spin and still drive the SUV to work.

How much lost time/money in red tape is all this going to cost companies & the gov administration for it?

Also if all bikes were VAT exempt you might see more kids cycling to school, and then it snowballs. I expect the main reason is to get traffic off road. But also casual non commuters could do with VAT free bikes, if the gov is serious about the obesity problem. Could even have a good effect on our own economy, not only will more buy within Ireland, but UK people could possibly import a cheaper bike from here, our Gov would get no VAT, but at least jobs in bike shops would get a boost.

All exercise equipment should be exempt IMO.

The new scheme should cost nothing. It's just a tax-exempt benefit in kind. There is not really any administration required; the companies will just deal with it like any other expense (or at least mine will).

VAT-free bikes could just result in higher bike shop or distributor margins, and little benefit for the consumer.

UK distributors often take the piss with Irish RRPs, because they can. I was buying jewellery at Christmas and saw the shop's latest RRP list, which had sterling and euro prices. Euro prices were just £x1.5.

High earners in SUVs is a bit of a stereotype as well. Everyone knows high earners drive Astons.

DirkVoodoo

The scheme in the UK is a 41% saving over the retail price is it not?

Raam

el tonto wrote: »

Just had a quick look at some of the measures from Gormley's carbon budget today. €5 million allocated to upgrade Dublin's bike paths. Let's see what they regard as an upgrade.

I'd prefer that they spend it on roads.

souter

Got myself a new bike earlier this year, but have been shopping around for lights
..and associated safety equipment..

But then noticed this bit
..This tax exemption may only apply once in every 5-year period..

Does this mean you get one chance to use it, and you can't keep a running tally of tyres, lights etc? In which case, crap, I really like my new bike, can't be arsed sellnig it just to replace (700e new)

rubadub

Lumen wrote: »

The new scheme should cost nothing. It's just a tax-exempt benefit in kind. There is not really any administration required; the companies will just deal with it like any other expense (or at least mine will).

Ask how much a transaction like this or "any other expense" really costs though. I remember our storesman saying each order processed costs at least €25 in admin, once you tot up each and every persons time.

I remember overhearing a lad in the office on the phone to accounts for ages trying to get some sort of tax back on luas or train tickets. His time was wasted, but the accounts people must have had to go read up all this stuff form scratch, just to get a few shillings back on tax.

Lumen wrote: »

VAT-free bikes could just result in higher bike shop or distributor margins, and little benefit for the consumer.

And so will/could this scheme. Somebody already mentioned €999 offers already in bike shops IIRC, with bundles of the "safety gear", gone up from €699

Does this mean you get one chance to use it, and you can't keep a running tally of tyres, lights etc?

Sounds like it, so you really will be getting all in the one shop. So they will pull the woodies & powercity trick, some things appear cheap so you presume everything is just "the going rate", while they screw you on other things. Most do not know the going rate for bikes too.

Stark

rubadub wrote: »

I remember overhearing a lad in the office on the phone to accounts for ages trying to get some sort of tax back on luas or train tickets. His time was wasted, but the accounts people must have had to go read up all this stuff form scratch, just to get a few shillings back on tax.

It would be a lot more than a few shillings. You can have the cost of a monthly/annual ticket deducted from your gross salary saving you several hundred euro a year.

In our workplace, you can take some or your annual bonus in the form of a bus/rail ticket (as well as other tax exempt options such as shares/extra pension contribution). I'm hoping they might add the bicycle scheme to the list of options. It's a pity they don't just have a voucher scheme where they can issue you a voucher for a bicycle; that would save loads in admin hassle.

Bunnyhopper

el tonto wrote: »

Just had a quick look at some of the measures from Gormley's carbon budget today. €5 million allocated to upgrade Dublin's bike paths. Let's see what they regard as an upgrade.

If they'd upgrade them by making them non-mandatory then that'd be great - and it wouldn't even cost €5 million.

Stark

Apparently the Sutton-Sandycove route will be part of the cycle lane upgrades. That could be nice.

http://www.breakingnews.ie/ireland/mhidcwaueyql/

http://www.s2s.ie/