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Bike to work scheme

  • 24-04-2010 10:44PM
    #1
    Usjes
    Registered Users, Registered Users 2 Posts: 327 ✭✭


    Hi,

    Does anyone know exactly how the 'bike to work scheme' works? Specifically what I want to know is:
    Is there any monetary cost to my employer? The way I thought it worked was:
    - Employer pays full cost of bike
    - Employer deducts 49% (I'm on the higher rate) from my salary
    - Employer recovers the other 51% by withholding tax, PRSI, levy etc. that would otherwise normally be paid to the revenue commissioners.
    => Net cost to the employer is ZERO ?
    Is this correct ? I ask because on reading the revenue guidance doc. I see:
    The employer cannot reclaim the VAT on the bike. But I'm not sure what relevance this has. Or does this mean that there is some net cost to the employer ie. the VAT on the bike ?
    So can anyone enlighten me, is the net cost to the employer zero ?

    Thanks,


Comments

  • #2
    AugustusMinimus
    Registered Users, Registered Users 2 Posts: 4,591 ✭✭✭AugustusMinimus


    Isn't the bike to work scheme a salary sacrifice scheme ?

    Usually if you tell your employer to buy you a bike and then deduct the cost of the bike (net of tax savings for him) from your salary, you should get taxed on the cost of the bike as a perquisite.

    Under this scheme, your boss can buy you a bike up to €1,000 and get full deductibility for himself against his trade income. The bike won't be viewed as a perquisite for you and you won't get taxed on it.

    So basically, my reading is

    Your boss pays for the cost of the bike and then gets tax, prsi and income levy savings.
    Your boss then passes on the remaining cost to you by deducting it from your salary.


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