Bicycle, tax back for self employed?

515

I'm a sole trader and am interested in the cycle-to-work scheme (up to €1K tax free on a bike if paid for by the imployer). Does anyone know if this scheme is also available for the self-employed / sole-traders?

If not, are there other tax breaks for a bike used sometimes for getting in and around town for meetings? Is it already a deductable? Can VAT be claimed back?

Any info appreciated.

swanvill

Hi,
The new legislations seems to only apply to directors/employees and not sole traders, however I reckon that you could just charge the bike & safety equipment as a normal business expense. The only thing you might have to watch, which is bit daft, if there is any personal usage which could be benefit in kind implications.

515

Thanks Swanvill. So I'd get the VAT back that way? Would it also be deducted off my taxable income?

I didn't think I could get benefit in kind from myself... interesting

swanvill

Yes VAT could be reclaimed and the bike would be deductible as a business expense.

RE BIK I might be a bit over cautious, typical accountant but if the bike was not used 100% for business (hard to disapprove I know ) but say only 75% then only 75% of the costs would be allowed as a business expense.

515

Interesting... so in effect it's actually a bit better than the cycle to work scheme (if the bike is exclusively for work)

swanvill

Yep, happy cycling

air

Sorry to dig this up, but would you not have to pay tax on the profit used to buy the bike (ex vat) as it is an asset which you have acquired? I would have thought it would have to be handled like any other piece of business equipment & written off over a few years or whatever.

swanvill

Hi Air,
It would depend on your accounting policy. For small items of expenditure up to €1,000 or so I would charge directly to the Profit & Loss account rather than creating an asset, thus creating depreciation, capital allowances etc. My reason would be the size of expenditure.

Strictly you could argue that the bike will last 10 years+ and should be expensed 1/10th a year. However this would not be as beneficial (tax wise) as taking the full charge to the P&L in one go.

I would expense all safety equipment on the basis, you should be expecting to replace after on use (i.e. fall ) or after a year for safety reasons

mambo

swanvill wrote: »

Yes VAT could be reclaimed and the bike would be deductible as a business expense.

RE BIK I might be a bit over cautious, typical accountant but if the bike was not used 100% for business (hard to disapprove I know ) but say only 75% then only 75% of the costs would be allowed as a business expense.

Can a bike for travelling to/from work be a deductible tax expense, when
motoring expenses for journeys from your home to/from work are NOT allowable according to www.revenue.ie/en/tax/it/leaflets/it48.pdf
which states "journeys between your home and regular place of work are treated as private and not business".

Or does Revenue apply one rule for cars, another for bikes?

mambo

I contacted Revenue and they say

"If the bicycle is only being used to go to and from the normal place of work then no part of the cost of the bicycle is allowable"

So that's that then.