Abuse ot the Cycle to Work Scheme

Dowee

What's the general view on here on using the bike to work scheme for a bike which you don't intend to use to cycle to work? Having recently bought a bike which I could probably have put through the scheme (employer is signed up and I cycle to work) but didn't as it'll never be used to go to work, I'm wondering if I'm in the minority in thinking that even if you can cheat the scheme you shouldn't as it isn't much different to tax fraud, albeit on a small scale.

Captain Havoc

I think it should be used in such a manor. You pay taxes for services you'll never use in your life. I believe a lot of the B2W is to get some of the strain off hospitals by having a fitter population and ease congestion on the roads, if your on your bike then you're doing this anyway.

Lumen

I personally don't get too worked up about other people committing tax fraud.

I wouldn't do it myself, but if people want to take the risks of being royally reamed by the Revenue it's their business.

The scheme doesn't require that you use the bike for commuting to work, only that you intend to at the time of purchase. I know people who bought a bike with that intention, then realised it wasn't really their thing. That's OK.

alfalad

It's an incentive to get people out on bikes, get fitter etc, which as said will save the government money in the long run. The shop that sells the bike pays Vat on it and then pay tax on the profit, remember they have sold far more bikes because of the scheme. The roads are less congested as are the buses again saving the government money so the scheme doesn't cost much when it's all netted out. I bought the bike through the scheme and I cycled to work today but thats a rarity to be honest as i don't like using my nice carbon fibre beauty on the rough streets of dublin, but I walk in anyway so I have a clear conscience about it.

With all the extra taxes we pay in this country I just consider it a little gift from the governement!

Dowee

Lumen wrote: »

I personally don't get too worked up about other people committing tax fraud.

I wouldn't do it myself, but if people want to take the risks of being royally reamed by the Revenue it's their business.

The scheme doesn't require that you use the bike for commuting to work, only that you intend to at the time of purchase. I know people who bought a bike with that intention, then realised it wasn't really their thing. That's OK.

I agree with what you're saying, to be honest I don't get worked up about it. Although I do think you are meant to cycle 3 times a week (but perhaps that's specific to my company). I've no issue with someone buying who intends to cycle to work but it doesn't really work out that way. I do have a slight issue with people abusing the scheme with purchases that are never intended to be used to cycle to work.

It's all personal opinion I guess I just wouldn't like to see the scheme pulled because people are using it in this way as hopefully I'll get to use it myself when I need new parts for my commuter or in fact need/want a new one.

Beasty

I would add to the above comments that the employer must buy the bike. I you have already bought it directly from the shop, it is not eligible for the scheme anyway

Beasty

Dowee wrote: »

Although I do think you are meant to cycle 3 times a week (but perhaps that's specific to my company)

The legislation requires you intend to use it "mainly" for commuting. This means more than 50% of the bike's usage. There is no minimum requirement regarding number of days or miles you commute with it.

I am not sure how the employer can even put a minimum number of days commuting on this. They must make the scheme available to all employees. This may be more of a guideline to get themselves satisfied the scheme is not being abused, but I suspect they would not be able to enforce this if challenged

Dowee

Beasty wrote: »

I would add to the above comments that the employer must buy the bike. I you have already bought it directly from the shop, it is not eligible for the scheme anyway

I'm not trying to get the bike I bought put through the scheme.

The 3 day thing is probably a guideline set by my company. I read it somewhere.

Single Malt

There is no way of enforcing what you use a bike for

Dowee

Single Malt wrote: »

There is no way of enforcing what you use a bike for

That's completely not the point I'm making or asking opinions on. But thanks for stating the obvious anyway.

c montgomery

I am getting a bike through the scheme next week and i dont intend ever using it to cycle to work at any stage.

My reasons are as follows:
I live 26 miles from where i work traveling on roads with no cycle lanes, layby's or footpaths and which are really dangerous.
I have been cycling for many years and think this is a great scheme.
I need a new road bike.
I payed 17,000 in tax last year and got little in return for it.
I will use the bike at least 3 times a week cycling a total distance of at least 120km.
I will be healthier and will require less from the health system.
I will take anything i can get from revenue as they will take anything they can get from me.

Quigs Snr

I think you should hand yourself into the authorities immediately. Sure its only getting a tax break on a bike but where does it end ? Before you know it you will be into robbery, prostitution and drug trafficking. Its a slippery slope I tell you.

Its like this. It doesn't matter what you do, as long as the yellows are in government this scheme will exist. As soon as they are gone, it will follow shortly after (even though its apparently only costing chump change so far relatively speaking and its cost is likely to go down over the next few years after the initial wave of uptake I reckon).

Do whatever feels right to you I say. For me, I am not so fussed on the guidelines, so long as the bike is bought for some sort of noble reason (getting fit / taking some strain off our health system before we all need to wear elasticted pants like our health minister or commuting and getting some cars off the road - I think most users of the scheme fall into these categories)

roadmanmad

I think there is fraud & fraud

My local bike shop owner ran a woman out of the shop a while back when she wanted to buy 4 childrens bikes on the back to work scheme. He just did not want to know, but there a places (appearenetly) that are selling alternative goods under the scheme. (i.e. ride on lawn mowers) or what other items they may sell in their shop.

This will make the whole scheme a joke and eventually will be removed to excessive abuse.

But seriously, I can't wait to persue the latest lawnmower when i'm out on the bike. I wonder what kind of gears they have for hills. i must enquire??????

Harrybelafonte

Dowee wrote: »

What's the general view on here on using the bike to work scheme for a bike which you don't intend to use to cycle to work? Having recently bought a bike which I could probably have put through the scheme (employer is signed up and I cycle to work) but didn't as it'll never be used to go to work, I'm wondering if I'm in the minority in thinking that even if you can cheat the scheme you shouldn't as it isn't much different to tax fraud, albeit on a small scale.

More importantly, why do you need to come on to an internet forum to look for people to agree/disagree with your concept of what is moral.

Dowee

It's called a discussion. It tends to be an integral part of internet forums.

Harrybelafonte

Dowee wrote: »

It's called a discussion. It tends to be an integral part of internet forums.

Really, ah right. Sorry. I'll start one up about helmets then, cos I might be in the minority in thinking that not wearing a helmet isn't much different to suicide, albeit on a smaller scale.

Dowee

I agree, helmets are a must.

Harrybelafonte

Dowee wrote: »

I agree, helmets are a must.

LOL alright, so we agree on something then

xz

roadmanmad wrote: »

I think there is fraud & fraud

My local bike shop owner ran a woman out of the shop a while back when she wanted to buy 4 childrens bikes on the back to work scheme. He just did not want to know, but there a places (appearenetly) that are selling alternative goods under the scheme. (i.e. ride on lawn mowers) or what other items they may sell in their shop.

This will make the whole scheme a joke and eventually will be removed to excessive abuse.

But seriously, I can't wait to persue the latest lawnmower when i'm out on the bike. I wonder what kind of gears they have for hills. i must enquire??????

people have got wheelsets or groupsets on the scheme, and brought back quotes for bikes to their companys, I don't see this as abuse, as most of these people would already have more than 1 bike, and already cycle to work.....it's just a case of upgrading their existing mode of transport, which is the bike, in fact I think the Government should extend the scheme to cover such things as well.Technically speaking they do as it the tax break is for a bike and ACCESSORIES

Beasty

xz wrote: »

people have got wheelsets or groupsets on the scheme, and brought back quotes for bikes to their companys, I don't see this as abuse, as most of these people would already have more than 1 bike, and already cycle to work.....it's just a case of upgrading their existing mode of transport, which is the bike, in fact I think the Government should extend the scheme to cover such things as well.Technically speaking they do as it the tax break is for a bike and ACCESSORIES

Whether you see it as abuse or not, the law sees it as tax evasion.

Accessories are not mentioned in the scheme. The only items that qualify are (new) bikes and "associated safety equipment"

The following items are all qualifying bicycle safety equipment:

1. Cycle helmets which conform to European standard EN 1078
2. Bells and bulb horns
3. Lights, including dynamo packs
4. Mirrors and mudguards to ensure riders visibility is not impaired
5. Cycle clips and dress guards
6. Panniers, luggage carriers and straps to allow luggage to be safely carried
7. Locks and chains to ensure cycle can be safely secured
8. Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs
9. Reflective clothing along with white front reflectors and spoke reflectors

xz

Beasty wrote: »

Whether you see it as abuse or not, the law sees it as tax evasion.

Accessories are not mentioned in the scheme. The only items that qualify are (new) bikes and "associated safety equipment"

The following items are all qualifying bicycle safety equipment:

1. Cycle helmets which conform to European standard EN 1078
2. Bells and bulb horns
3. Lights, including dynamo packs
4. Mirrors and mudguards to ensure riders visibility is not impaired
5. Cycle clips and dress guards
6. Panniers, luggage carriers and straps to allow luggage to be safely carried
7. Locks and chains to ensure cycle can be safely secured
8. Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs
9. Reflective clothing along with white front reflectors and spoke reflectors

Everything you have listed there are ACCESSORIES

Beasty

xz wrote: »

Everything you have listed there are ACCESSORIES

I was simply making the point that the legislation does not refer to "ACCESSORIES" at all. If you had qualified this with the word "safety" I would not have made the point. However someone reading your post could easily draw the conclusion that a much wider range of "accessories" qualify.

xz

When i got my bike on the CTW scheme, the literature stated that the tax incentives were for a bike and accessories to the value of €1,000. And yes, I believe that a much wider range of accessories should qualify, a bike isn't just a bike. MOst people that would post in this forum, if they bought a factory built bike straight from their LBS, would not leave it as is for long, they would be swapping out saddles, wheels etc. which are more for added comfort and personal taste

Beasty

xz wrote: »

When i got my bike on the CTW scheme, the literature stated that the tax incentives were for a bike and accessories to the value of €1,000.

I am simply quoting from the legislation (Section 118(5G) TCA 1997)

Beasty

If you want to check the full Revenue guidelines they can be accessed via the following link:

http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-and-corporation-tax/part-05/05-04-08.pdf

Tawfee

Beasty wrote: »

Whether you see it as abuse or not, the law sees it as tax evasion.

Accessories are not mentioned in the scheme. The only items that qualify are (new) bikes and "associated safety equipment"

The following items are all qualifying bicycle safety equipment:

1. Cycle helmets which conform to European standard EN 1078
2. Bells and bulb horns
3. Lights, including dynamo packs
4. Mirrors and mudguards to ensure riders visibility is not impaired
5. Cycle clips and dress guards
6. Panniers, luggage carriers and straps to allow luggage to be safely carried
7. Locks and chains to ensure cycle can be safely secured
8. Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs
9. Reflective clothing along with white front reflectors and spoke reflectors

I had hoped to purchase a new frameset under the scheme & build it up with finishing kit that i already own. I take it from your quotation that that's not possible under the scheme??

Beasty

Tawfee wrote: »

I had hoped to purchase a new frameset under the scheme & build it up with finishing kit that i already own. I take it from your quotation that that's not possible under the scheme??

From one of the other guidance notes issued by the Revenue (http://www.revenue.ie/en/practitioner/law/bik-exemption-for-bicycles.pdf):

"The exemption only applies to expenditure incurred in the purchase of a whole bicycle or associated safety equipment."

Tawfee

Beasty wrote: »

From one of the other guidance notes issued by the Revenue (http://www.revenue.ie/en/practitioner/law/bik-exemption-for-bicycles.pdf):

"The exemption only applies to expenditure incurred in the purchase of a whole bicycle or associated safety equipment."

Thanks Beasty, hadn't seen that document, clarifies it all really...

Blowfish

Tawfee wrote: »

Thanks Beasty, hadn't seen that document, clarifies it all really...

You might get away with new brakes at least though. It'd be hard to argue that they aren't safety equipment.

Beasty

Blowfish wrote: »

You might get away with new brakes at least though. It'd be hard to argue that they aren't safety equipment.

The issue is you have to get everything at the same time. Get new brakes now and you then have to wait 5 years before you can use the scheme again.

Clearly there are a number of items of "safety equipment" sepcified, and you could probably get together a package which uses up quite a bit of the €1,000 limit, but this would always be subject to the rules of your own employer's scheme.

Huggles

I have never seen such uptightedness (I made that word up) in regards to the revenue.

I bought my most recent bike for commuting myself and I am about to use the C2W scheme to get my second, more bling, road bike for training and long distance spins (South of France 2010).

I am paying PAYE and income tax on sole trader income. The revenue can spin as far as I am concerned.

mmclo

5.4.8
There is no obligation on an employer to keep a record of the usage of the
bicycle/safety equipment by an employee or director.

Employers – notification and records
An employer is not obliged to notify Revenue of the provision of bicycles/safety
equipment to its employees and directors. The purchase of bicycles and
associated safety equipment by employers for directors and employees are subject to
the normal Revenue audit procedure with the normal obligations on employers to
maintain records (e.g. delivery dockets, invoices, payments details, etc.). The
employer is also obliged to keep all salary sacrifice agreements entered into between
the employer and employees/directors, together with all signed statements from
employees/directors regarding use of the bicycles/safety equipment.

So the only paperwork or checking relates to the payments etc. It is rare that revenue make such specific declarations i.e. on other tax breaks. Nobody is checking on usage and it is clearly stated that they shouldn't.

WicklowRacer

I got a new carbon hardtail XC frame for next years season... so strictly speaking not for cycling to work, but I do this anyway and have done for 25 years so no guilt about it whatsoever !

loyatemu

I ordered my bike last week, I can't see myself getting to the point where I use it "mainly" for commuting (its 30km each way, and I currently get the Dart) but once I've got a few miles under my belt I will give it a go and maybe do it a couple times a week during the summer - I think this is abiding by the spirit of the scheme, if not the letter of the law.

The regulations are pretty much unenforceable anyway, I wouldn't begrudge anyone using the scheme to get a leisure bike, though buying kids bikes, or lawnmowers etc is definitely a bit off.

griffin100

I'm getting a new tri bike under the scheme. I live 100kms from work so commuting is not practical, but I will cycle in to work a few times over the summer. I pay over €4k a month in PAYE, I'll save approx €500 by using this scheme, so I've no guilt in this regard.

Jawgap

I wouldn't class this as fraud - it's more like tax avoidance.

You're going to buy a bike which (I presume) you will use - just not for cycling to work? Go for it, I'd say.

Fraud would be conspiring with abike shop to invoice an employer for a bike never collected and then divvying up the money with them - now that's fraud!!

In terms of relevant journeys, you can use it to do part of your commute, for example to / from the train station or bus stop. I got a bike under the scheme and occasionally I take it on the car and do the last 15 km on the bike (although more often than not I do the full commute on it).

Herself, got one in her place and uses it to get to the train station.

Poncherello

Griffin are you paying more than 1K for the bike. How does it work if say I want to buy a bike for 4K under the scheme. Work pays 1K seperately to me or does the entire payment need to come from one source ?

Idleater

Poncherello wrote: »

How does it work if say I want to buy a bike for 4K under the scheme. Work pays 1K seperately to me or does the entire payment need to come from one source ?

Work has to pay the full whack, and you get relief on the first €1000. The balance is effectively taxed as BIK (ie it comes off your net as opposed to gross).

Lumen

Jawgap wrote: »

I wouldn't class this as fraud - it's more like tax avoidance.

"Tax avoision"

</Kent Brockman mode>

alfalad

nereid wrote: »

Work has to pay the full whack, and you get relief on the first €1000. The balance is effectively taxed as BIK (ie it comes off your net as opposed to gross).

My place issued a cheque for €1,000 and I paid the balance when the cheque was issued, I actually paid €100 as a holding deposit so he would issue the invoice!

Idleater

alfalad wrote: »

My place issued a cheque for €1,000 and I paid the balance when the cheque was issued, I actually paid €100 as a holding deposit so he would issue the invoice!

obviously, I was stating the way the revenue "insist" it should be done, in the real world there are going to be crafty not illegal (nor immoral/unethical) solutions.

I've no doubt that there are places of work that have no interest in coughing up cash for 20 people all wanting €4k bikes, with each participant paying it back in instalments over the next 12 months (which is allowable for under the scheme).


Second hand bikes are another interesting one... Perfectly legal (and moral/ethical) but difficult to achieve with unwilling employers.

BryanL

Before the scheme came in how many people bought bikes to ride to work or just excercise and never did??? I would say a majority.
I think the scheme is also intended to increase all cycle activity and help out bike shops at a time in which they would otherwise have a very low turnover.
Every mile cycled benefits the cyclist, other road users and the health care system.
Bryan

mmclo

griffin100 wrote: »

I pay over €4k a month in PAYE,

Are you Roddy Molloy? On those figures you will be a millionaire in a few years...well done

griffin100

Are you Roddy Molloy? On those figures you will be a millionaire in a few years...well done

Ha, I wish.

Griffin are you paying more than 1K for the bike. How does it work if say I want to buy a bike for 4K under the scheme. Work pays 1K seperately to me or does the entire payment need to come from one source ?

You can only claim tax relief on the first €1,000 so you can get the shop to give you the quoute / receipt for only €1,000 irrespectibe of whay you pay - this is what the shops I looked in last week were suggesting. Or just submit the larger quote / invoice to your employer and state that you only want your empoyer to pay the first €1,000.

If there is more than €1,000 shown on the toal costs of the bike my employer is willing to pay all of the amount and claw it back from my salary over 12 months. Whilst this sounds like a good deal any amount paid over and above €1,000 is essentially an interest free loan from my employer which is subject to benefit in kind tax - not great.