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Bike to Work scheme - the Megathread - Read post #1 before posting

Beasty

Firstly this thread is not about which bike should you get under the BTW scheme – there are too many variables to try and cover this in a single thread. It is to provide a summary of the scheme, some do’s and don’ts and act as a single thread for all technical aspects of the scheme.

Any new threads created covering the rules and application of the scheme will either be locked or transferred to this thread. Please ensure you review the whole thread before posting a new query

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triggermortis

Quick question: I'm moving back to Ireland soon to a new job and will be a new tax payer. Would I be able to do the scheme from the start, or would I have to wait a while? I was just reading the last few pages of this thread and it's got me wondering about this. I've paid Irish tax before but not in the last 5 years due to working abroad.

Beasty

triggermortis wrote: »

Quick question: I'm moving back to Ireland soon to a new job and will be a new tax payer. Would I be able to do the scheme from the start, or would I have to wait a while? I was just reading the last few pages of this thread and it's got me wondering about this. I've paid Irish tax before but not in the last 5 years due to working abroad.

As soon as you are under Irish PAYE you qualify

AlmightyCushion

It might be more beneficial to wait until next year though. If you come back with only a few months left in the tax year, even if your yearly pay is quite high your pay for this tax year wo be low. For example if you start a €60k a year job in October, your pay for this tax year is only €15k which would save you next to nothing on the bike to work scheme.

TychoCaine

triggermortis wrote: »

Quick question: I'm moving back to Ireland soon to a new job and will be a new tax payer. Would I be able to do the scheme from the start, or would I have to wait a while? I was just reading the last few pages of this thread and it's got me wondering about this. I've paid Irish tax before but not in the last 5 years due to working abroad.

It doesn't matter how long you've been with the company, but to get the most benefit you should be paying €1k+ in the top tax bracket. Depending on your current situation that might not happen this year. I'd advise checking with your new employer and maybe holding off until the new year. Also, a lot of companies don't allow access to the scheme until you've completed your probationary period anyway.

bren2001

What happens in the case where you are just in the higher tax bracket but not by €1000. The standard rate cut-off point is €33,800 but (for ease of mathematics) say I was on €34,000. Would I get 51% relief on the €200 and 31% on the remaining €800? (assuming €1000 was spent)

Wanderer78

bren2001 wrote:

What happens in the case where you are just in the higher tax bracket but not by â‚¬1000. The standard rate cut-off point is â‚¬33,800 but (for ease of mathematics) say I was on â‚¬34,000. Would I get 51% relief on the â‚¬200 and 31% on the remaining â‚¬800? (assuming â‚¬1000 was spent)

My understanding is, if you're in the high bracket, happy days, I.e. you get the full benefit on whatever value goods you purchase up to â‚¬1000

Beasty

No bren2001 is correct. It comes off your top line pay and if you don't have €1,000 in the higher bracket the balance reduces tax at the lower rate (the net effect is to move you into the lower bracket)

brianomc

bren2001 wrote: »

What happens in the case where you are just in the higher tax bracket but not by €1000. The standard rate cut-off point is €33,800 but (for ease of mathematics) say I was on €34,000. Would I get 51% relief on the €200 and 31% on the remaining €800? (assuming €1000 was spent)

Yeah, that's how it would work. The payroll software doesn't care what scheme it is, it just takes the €1000 off your pay before working out the tax. So in that case, over the year it would only tax you at €33,000.

PAYE
Before B2W scheme
40% of €200 = 80
20% of €33800 = 6760
Total PAYE due before tax credits = 6840

After B2W scheme
20% of €33,000 = 6600

So you would save €240 in PAYE as opposed to someone earning €35k, who would save €400 in PAYE as their €1000 would all be saved at the higher rate.

There's also PRSI and USC savings but you get the gist.

dahat

Took out a B2W this year, job went bust soon after so bike only cost me €200 or so.

As far as I know the employer claims back the allowance at end of tax year but seeing as the job I was in is now non existent is my bike to work still valid?

cython

dahat wrote: »

Took out a B2W this year, job went bust soon after so bike only cost me €200 or so.

As far as I know the employer claims back the allowance at end of tax year but seeing as the job I was in is now non existent is my bike to work still valid?

What allowance? Typically the Revenue don't know anything about who has availed of BTW scheme, and there is an honour system in place (and the potential for audit, I guess) that the scheme is not abused. The employer simply deducts the salary sacrifice from your gross wage, and the Revenue just sees that you earned up to €1k less for that given period. That being said, you arguably could/should have the remainder of the sacrifice deducted from your last salary/wage payment from the employer. If you have already received that, and no deduction was made then I guess someone messed up, though not certain that you couldn't be pursued for it still.

dahat

Yeah, I have received all monies due plus redundancy etc and no deduction to cover the unpaid remainder. ..
The employer went into liquidation and no longer exists.

By ringing the revenue am I alerting them to this or are they blissfully unaware?

CramCycle

dahat wrote: »

Yeah, I have received all monies due plus redundancy etc and no deduction to cover the unpaid remainder. ..
The employer went into liquidation and no longer exists.

By ringing the revenue am I alerting them to this or are they blissfully unaware?

Not sure why you would ring revenue, it looks like a clerical error. If the company still existed, morally you would go to them.

All alerting revenue would do is tell them that you owe them less but since you can't pay the money back to your employer, to save you paying tax on it, they will probably be confused as to why you are ringing.

My understanding is revenue are better off by you not telling them (the remainder you would have paid tax on, which normally you would not have).

No tax evasion, and if there is no company to hand the B"W money too, no moral one either unless yo think that money would ahve kept them afloat.

The scheme is based on honour so revenue certainly won't be looking for oyu to ask you to give the money to someone else, so they can pay you some money back.

dahat

CramCycle wrote: »

Not sure why you would ring revenue, it looks like a clerical error. If the company still existed, morally you would go to them.

All alerting revenue would do is tell them that you owe them less but since you can't pay the money back to your employer, to save you paying tax on it, they will probably be confused as to why you are ringing.

My understanding is revenue are better off by you not telling them (the remainder you would have paid tax on, which normally you would not have).

No tax evasion, and if there is no company to hand the B"W money too, no moral one either unless yo think that money would ahve kept them afloat.

The scheme is based on honour so revenue certainly won't be looking for oyu to ask you to give the money to someone else, so they can pay you some money back.

So according to Revenue will i have used my B2W this year? While I understand the finance side of it withy previous employer going bust the N+1 in me in oh so curious as to whether there is a record of me using the B2W in 2016.

cython

dahat wrote: »

So according to Revenue will i have used my B2W this year? While I understand the finance side of it withy previous employer going bust the N+1 in me in oh so curious as to whether there is a record of me using the B2W in 2016.

There may be a record in the books and/or files of the liquidated company (e.g. you may have signed a declaration of intending to use the bike mainly for qualifying journeys, and/or a salary sacrifice agreement, for example), but any such records are internal to the company, and there is no requirement for any of this documentation to be forwarded to the Revenue.

In any case, regarding the N+1 question, there is an "untested" interpretation (see the BTW megathread for discussion on same) that once you change employment the clock resets, as you are no longer the same employee, rather you are a new employee in another company. In that scenario, if you have/get a new job then you already have a new BTW entitlement at that point in time, assuming they operate the scheme.

CramCycle

MOD VOICE: Merged with megathread

CramCycle

dahat wrote: »

So according to Revenue will i have used my B2W this year? While I understand the finance side of it withy previous employer going bust the N+1 in me in oh so curious as to whether there is a record of me using the B2W in 2016.

I have used it four times in total, with three different employers.My reading of the scheme, puts me on the right side of the law and I don't try and hide it in anyway.

This said, if Revenue ever decide that this was the wrong interpretation, I am more than happy to cough up. I have had my tax affairs reviewed a few times. I check my stuff out thoroughly, not as good as an accountant, and I think that sends up a flag for a "random" inspections. I have never once been asked about the bike to work scheme.

dahat

CramCycle wrote: »

I have used it four times in total, with three different employers.My reading of the scheme, puts me on the right side of the law and I don't try and hide it in anyway.

This said, if Revenue ever decide that this was the wrong interpretation, I am more than happy to cough up. I have had my tax affairs reviewed a few times. I check my stuff out thoroughly, not as good as an accountant, and I think that sends up a flag for a "random" inspections. I have never once been asked about the bike to work scheme.

When I am made a permanent employee I will apply for the scheme with my current employer as they do indeed run the scheme for employees.

If there is any issues I am sure I will be informed by either Revenue or my current employer.

Thanks for the help and information. :-)

Seve OB

dahat, technically the company paid for the bike for you. if they then charged you through your wages as a non taxable deduction then that just results in you paying less tax.

if they haven't charged you, well then they bought the bike for you (or the difference in what you paid back and total cost).

technically, then this should be treated as a benefit in kind and should have been put through your payroll. though there is a once a year exemption of €500 that could mitigate and tax exposure. Thought technically this should have been in one single separate transaction (I'm not sure how much your bike was)

So unless you already got your €500 allowance, or the bike was more than this, then you should be paying BIK, but I'm not sure on the process if the employer doesn't deduct it....... say nothing is easiest all around

Seve OB

CramCycle wrote: »

I have used it four times in total, with three different employers.My reading of the scheme, puts me on the right side of the law and I don't try and hide it in anyway.

This said, if Revenue ever decide that this was the wrong interpretation, I am more than happy to cough up. I have had my tax affairs reviewed a few times. I check my stuff out thoroughly, not as good as an accountant, and I think that sends up a flag for a "random" inspections. I have never once been asked about the bike to work scheme.

Hmmm, you are only allowed use it once every 5 years. I don't think it has been running for 20 years now has it

mcgratheoin

Seve OB wrote: »

technically, then this should be treated as a benefit in kind and should have been put through your payroll.

Nope - bikes are exempt from BIK as part of the scheme. From the revenue website:

Are employees availing of the scheme liable to benefit-in-kind taxation?
No. Under the scheme an employer may provide an employee with bicycle and/or cycle safety equipment without the employee being liable for benefit-in-kind taxation limited to a cost of €1000. Where cost exceeds this amount a BIK charge will apply to the balance.

Seve OB

mcgratheoin wrote: »

Nope - bikes are exempt from BIK as part of the scheme. From the revenue website:

yes, but the guy didn't have the cost deducted from his wages

Beasty

Seve OB wrote: »

Hmmm, you are only allowed use it once every 5 years. I don't think it has been running for 20 years now has it

I have always read it as "per employment" (and have stated that, and my rationale behind it, numerous times within this thread)

mcgratheoin

Seve OB wrote: »

yes, but the guy didn't have the cost deducted from his wages

Doesn't matter, your work can (if you have a nice boss) decide to give you a bike at their own expense and it does not count as a BIK.

**edit**
Just to clarify, it's the same as your work deciding to give you a €1000 raise for that year and then using that €1000 to buy a bike and give it to you. E.G.
You earn €40000 a year. Your generous work gives you a bike on the BTW scheme, you pay tax on a gross salary of €40000.
You earn €40000 a year. Your work gives you a €1000 raise, your regular work offers a BTW scheme and you buy a bike for €1000. You pay tax on a gross salary of €40000.

CramCycle

Seve OB wrote: »

Hmmm, you are only allowed use it once every 5 years. I don't think it has been running for 20 years now has it

Once with my current employer, once with a former employer I was working part time for, and twice with my former full time employer.

Like I said, if revenue see this as an abuse or a misreading of the rules, then I will pay any monies owed.

Seve OB

mcgratheoin wrote: »

Doesn't matter, your work can (if you have a nice boss) decide to give you a bike at their own expense and it does not count as a BIK.

**edit**
Just to clarify, it's the same as your work deciding to give you a €1000 raise for that year and then using that €1000 to buy a bike and give it to you. E.G.
You earn €40000 a year. Your generous work gives you a bike on the BTW scheme, you pay tax on a gross salary of €40000.
You earn €40000 a year. Your work gives you a €1000 raise, your regular work offers a BTW scheme and you buy a bike for €1000. You pay tax on a gross salary of €40000.

Fair enough, I misread it.

Seve OB

Beasty wrote: »

I have always read it as "per employment" (and have stated that, and my rationale behind it, numerous times within this thread)

CramCycle wrote: »

Once with my current employer, once with a former employer I was working part time for, and twice with my former full time employer.

Like I said, if revenue see this as an abuse or a misreading of the rules, then I will pay any monies owed.

Now I think you both know that is completely chancing you arm. There is an honesty policy here so the revenue will never know unless they dig deep. There is nothing to do with "per employment". It is once every 5 years and that's it. mind you, It is for the purpose of buying a bike to travel in and out of work on..... so how often is that abused! :rolleyes:

How often can an employee avail of the scheme?

The tax exempt benefit-in-kind may only be provided to an individual employee once in any period of five consecutive tax years. The tax year in which the bicycle is provided is counted as the first year.

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 the relief again for five years.

Beasty

The term used is "employee" which can only be determined by reference to a particular "employment". If they wished to restrict it in the way you suggest they could have used the term "individual" or indeed "taxpayer"

You may have a different interpretation, but I am certainly not "chancing my arm"

what_traffic

Beasty wrote: »

You may have a different interpretation, but I am certainly not "chancing my arm"

That is true - perhaps a better phrase would be not "adhering to the spirit of the scheme", however in reality the "bigger" issue would be the amount of people who have purchased a bike who have not cycled it to work at all IMHO.

not1but4

I'm looking to get a new bike in the BTW scheme but I'm not sure what to get. I currently have Carrera Crossfire 2 which I've had for the last 5 years. I do about 70-80km a week on the bike commuting while I do like mountain biking I don't do it enough to justify buying one of them bikes nor do I have any interest in doing any bike races anytime soon. I am looking to spend the full 1k and even top it up by 100 or 200 euro.

I went into a bike shop and asked for advise and they recommend me to get a flat bar racer. However one of the guys in work who has one said he wouldn't recommend it (as he got one last year) and suggested I get a hybrid bike.

Was also suggested to me in another shop a while back that I get a cross bike.

Any advise?

CramCycle

I'd go for the cross bike over the hybrid as it will be comfy but if you ever change your mind about longer spins.

It will be more comfy on the road than a racer but none of the limitations if you start doing longer distances.

If you can arrange it quickly and your company pays direct rather than a voucher operated scheme, then there are some bargains to be picked up around the place at this time of year. My LBS has a few just dropped below the 1000 line.