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Can someone explain the details of the Cycle to Work Scheme?

dinneenp

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.

But can anyone explain how it'll work

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Stark

Hungrycol wrote:

Remember folks it's only something you can get once every 5 years although if you change employments I don't know how that can be monitored.

You keep the same PPS number as you move from job to job so they'll be able to monitor it that way.

HJ Simpson

Which department is running this scheme is it the Dept of Finance or Dept of Environment. I just checked both sites and cant see any details. ?

HJS

Lumen

Stark wrote: »

You keep the same PPS number as you move from job to job so they'll be able to monitor it that way.

Who is "they"? The Revenue can't monitor it if there is no reporting mechanism in place (tax codes etc). Unless I've missed something there is no such mechanism planned.

Maybe this was designed by/for civil servants who never change employers.

blorg

HJ Simpson wrote: »

Which department is running this scheme is it the Dept of Finance or Dept of Environment. I just checked both sites and cant see any details. ?

As far as I can tell it will be the Revenue, it is just another tax-free BIK.

Hungrycol

rubadub wrote: »

I still don't get this 5 year bit. Do you have to submit all receipts at once? Is there a time limit?

Likely Yes, as this would be most convenient for you employer but if your employer is flexible they can keep a runniing reducing balance on what you've claimed. I'd say it's more likely to run as a once off claim by your employer, easier to manage that way. Remember your employer has no obligation to introduce the scheme. It's also repayable over a maximum 12 month period so adding onto a reducing balance would be cumbersome for your employer.

rubadub wrote: »

For somebody on a borderline higer tax bracket they might wait a few years for a pay rise so they can avail of the higher tax bracket too.

How long is a piece of string? That's probably like saying I'll wait a few years before I buy a PC cos they'll be better then. (sorry don't mean to sound sarky)

rubadub wrote: »

I expect I would be buying my bike online via credit card, would I just be handing in a C/C statement with the euro amount.

Yes I'm sure that's fine as long as the CC statement has the name of the shop e.g. Wiggle on it. Up to your employer as to what they accept as evidence of payment I would imagine. Be careful you don't have bigboobbabes.com on your cc statement when you hand it over

rubadub wrote: »

If my bike gets nicked in the first the month I get it (highly likely!), am I obliged to get another and cycle it to work for the next 5 years? That is another loophole open to be exploited, lad cycles to work on his sons bike a few times so the accounts say it is legit, and then claims it was nicked. Maybe the gardai will actually have to take bike theft seriously for once!

To be honest I don't think your employer will care if as long as you've fulfilled the necessary criteria for getting the tax free loan. I'd be too hard to police. You could buy a time-trial bike if you liked, not in the spirit of what's on offer though. If it got allegedly nicked and the gardai were informed then he's going to get in a lorra trouble.

For the 5 year thing, the Revenue may ask each claimant to sign a waiver to say that they have not received the benefit in the last 5 years. The obligation may be on the employer to send this to the Revenue and seek approval for the benefit to be allowed. Alternatively as the take up my be small they may assume honesty, as is their charter, and not police it at all. BUT if you're audited and found out you're in deep doodoo.

rubadub

Lumen wrote: »

I think you're overcomplicating. This is not a right to a never ending source of tax-free bikes. It's a one-in-5-years tax-free benefit. If you lose it, you can buy another, but don't expect tax relief on it.

I am just surprised that it seems so uncomplicated! esp. not having to buy it in Ireland. I think I would avail quickly before they adjust the scheme, but I suppose I vastly overestimate the amount of online purchases, the majority of people I "speak" to about bikes are just online so therefore are far more likely to be aware of buying a bike online. When people hear I got my bike online many are very surprised.

Hungrycol wrote: »

How long is a piece of string? That's probably like saying I'll wait a few years before I buy a PC cos they'll be better then. (sorry don't mean to sound sarky)

Not sarky, I was just throwing it out there as a possibility for people, it might be in your interest to delay payment to avail of it later at the full rate of tax. I am not saying hold off buying the bike, like a PC, rather buy it but not claim for it until a few years later if possible. Somebody might actually ask for a bonus to be deffered until the next year to exploit it. The company would also benefit by the deffered payment.

Hungrycol

rubadub wrote: »

Somebody might actually ask for a bonus to be deffered until the next year to exploit it. The company would also benefit by the deffered payment.

Absolutely. Great Idea. If you are due a bonus at Crimbo time and want to get a bike ask your HR dept if you can defer €x amount of it to buy Bike stuff in the new year. They'd be only too happy not to pay the 10.75% employers PRSI on it.

Chips Lovell

Quit spamming.

EDIT: Irrelevant now, spam deleted

thebestmac

Do remember it is your money. You may be getting a tax discount but you still have to pay. Some of the online bike shops (wiggle, chainreactioncyles, evans, etc.) are much cheaper than your local bike shop. Some of them are registered for the cycle to work scheme with the opw and you may get really good value by buying online. However you do need to be a little mechanical as there may be a little set up to do on arrival of the bike.

Killme00

Collected my new bike on Saturday from Parnell St. Its the sex.

Groe

Anyone know when it finishes?

Beasty

Groe wrote: »

Anyone know when it finishes?

There are no plans to stop the scheme. Hence it continues indefinitely, unless the politicians change their mind about its benefits (which is unlikely, given the relatively low cost involved, how popular the scheme is, and the positive publicity generated by it)

Groe

Brilliant as I was interested in getting a downhill bike but heard it was ending soon but that's good to hear.

Golfanatic

does anyone know how much you can claim from insurance? if it was knicked do u claim 1000 or 500?

Beasty

Golfanatic wrote: »

does anyone know how much you can claim from insurance? if it was knicked do u claim 1000 or 500?

It depends entirely on your own insurance policy. Many do not insure bikes worth €1,000 or more. If your's does, it then depends on the terms as to whether you get market (ie second hand) value, or replacement value. The fact you may have paid less because of the cycle to work schme should not make any difference.

Traumadoc

Beasty wrote: »

The fact you may have paid less because of the cycle to work schme should not make any difference.

You have not paid less, you pay 1000 euro from your pretax income, you pay less tax, hence the saving.

Dodge

Beasty wrote: »

There are no plans to stop the scheme. Hence it continues indefinitely, unless the politicians change their mind about its benefits (which is unlikely, given the relatively low cost involved, how popular the scheme is, and the positive publicity generated by it)

I haven't seen any figures? It didn't seem to be as popular as I thought it would be, but I nothing but anecdotal stuff

Russman

Haven't seen any figures myself either but, again, anecdotally, a lot of LBS are putting the shortage of bikes at least in part down to the success of the scheme. I've been looking to buy a bike for the last few weeks and got this story a lot from shops.
That and the fact that we mostly get the cast offs from the UK market !!

cdaly_

Golfanatic wrote:

claim from insurance

You insure it for the cost to replace it, not what you paid for it. Given that you can invoke the BTW saving once every 5 years, it'll cost full price to replace...

martyc5674

Lads,
Where i work finally announced that they are partaking in the BTW scheme (Raleigh to work or something?)
Anyway..my commute is about 35k of motorway...but id still like to "avail" of the tax break...do you think they look in to the fact that i will unlikely ever actually cycle to work? ...Thinking of getting a new MTB for the trails :-)
Marty.

blorg

martyc5674 wrote: »

Lads,
Where i work finally announced that they are partaking in the BTW scheme (Raleigh to work or something?)
Anyway..my commute is about 35k of motorway...but id still like to "avail" of the tax break...do you think they look in to the fact that i will unlikely ever actually cycle to work? ...Thinking of getting a new MTB for the trails :-)
Marty.

In a word, no. You are meant to "intend" to use the bike to cycle to work but there is no obligation whatsoever that you actually do so... plenty of people getting time trial bikes, mountain bikes, etc. that they would rarely commute on.

xoxyx

Hey. I think I know the answer to this, but what happens if you leave your job before the year is out. Do you have to pay back the full amount of the bike (minus your previous repayments) or just the amount after your tax saving?
I got a bike for over €1,000. Work paid for the first €1,000 and I'm paying them back in fortnightly installments through my wages. If I leave, do I only owe them whatever's left out of the €590 (€1,000 minus the 41% tax saving) or will I lose out on the tax benefit entirely?

seamus

z_topaz wrote: »

Hey. I think I know the answer to this, but what happens if you leave your job before the year is out. Do you have to pay back the full amount of the bike (minus your previous repayments) or just the amount after your tax saving?
I got a bike for over €1,000. Work paid for the first €1,000 and I'm paying them back in fortnightly installments through my wages. If I leave, do I only owe them whatever's left out of the €590 (€1,000 minus the 41% tax saving) or will I lose out on the tax benefit entirely?

It depends on your employer. Some employers may choose to just waive the rest of the cost of the bike. Unlikely though.

Most will simply deduct the outstanding cost of the bike from the gross amount on your final payslip. So if you've paid off €400 of the €1,000 and you leave, work will deduct €600 from the gross of your final payslip, which is a deduction before tax. This means that you will only have paid €354 from your final payslip.

I think basically the answer to your question is "yes", you will only have to pay the outstanding amount minus tax.

I don't know what the procedure is though if the amount outstanding is greater than your final pay packet. That is, you get paid weekly @ €300 (gross), and when you leave you still owe them €500 for the bike before tax. You won't get any money in your final pay slip, but you'll have to pay them €200 to make up the cost of the bike.

I assume then you could probably claim back the overpaid tax amount from revenue at the end of the year.

Lumen

z_topaz wrote: »

Hey. I think I know the answer to this, but what happens if you leave your job before the year is out. Do you have to pay back the full amount of the bike (minus your previous repayments) or just the amount after your tax saving?
I got a bike for over €1,000. Work paid for the first €1,000 and I'm paying them back in fortnightly installments through my wages. If I leave, do I only owe them whatever's left out of the €590 (€1,000 minus the 41% tax saving) or will I lose out on the tax benefit entirely?

To simplify, lets say the bike cost €1000, because I assume you paid the shop directly for the rest at the time.

Your employer paid €1000. You must pay them back €1000, which can come out of your gross wages.

If you've paid them back €400, then leave the job and with €600 outstanding, then you must pay them the €600, or else they'd be at a loss (unless they're in administration, in which case their creditors might theoretically come after you, but it's unlikely).

If you can pay back the entire amount outstanding from your final pay packet, do that.

Otherwise you'll have to pay them back out of your own pocket, which is taxed income, thus you'll lose the tax benefit on the remainder. I have no idea whether you can reclaim this from the Revenue.

Obviously the employer might have documented specific terms under their implementation of the scheme.

That's my understanding anyway.

Beasty

I am pretty sure you will not be able to claim any tax back from the Revenue after you leave the employment, as the scheme only operates under the PAYE system (and it would require some kind of certificate from your old employer to confirm the relief already claimed)

The good news is that if your new employer offers the scheme you can get a new bike there:) (ie you do not have to wait 5 years as you would have done with your old employer) - alternatively you could "top-up" with qualifying safety equipment (depending on what your new employer "offers") (eg cycle clips, or even a helmet). Of course if you do this, you then have another 5 year wait before you can use the scheme again with your new employer

mmclo

Beasty wrote: »

The good news is that if your new employer offers the scheme you can get a new bike there:) (ie you do not have to wait 5 years as you would have done with your old employer) - alternatively you could "top-up" with qualifying safety equipment (depending on what your new employer "offers") (eg cycle clips, or even a helmet). Of course if you do this, you then have another 5 year wait before you can use the scheme again with your new employer

Really? I doubt that, surely it's one bike per 5 years regardless of employer?

Revenue guide says...

"Additionally, the exemption from income tax in respect of the benefit-in-kind can only be availed of once in any five-year period by an employee or director."

Beasty

mmclo wrote: »

Really? I doubt that, surely it's one bike per 5 years regardless of employer?

Revenue guide says...

"Additionally, the exemption from income tax in respect of the benefit-in-kind can only be availed of once in any five-year period by an employee or director."

The legislation refers to "employee" and "director", which I interpret to mean employee and director of a specific employer. I believe the following supports my interpretation:

Benefit in charge legislation applies by reference to individual employments, in respect of benefits provided for individual amployees (or directors). There is no provision to "aggregate" employments (except where employers may be connected)
It is up to the employer to "police" the scheme. However it is not possible for one employer to know what benefits were provided by another employer. Hence to restrict it in this way would be completely impractical.
An employer must make the scheme available to all employees and directors, and hence they have no legal basis for preventing any employee or director from joining their scheme (and as I indicated above, they have no way of knowing what benefits may have been provided by a previous employer)
The legislation could have been more precise if it sought to prevent individuals from using the scheme with different employers - it could have made reference to "individuals" or "persons" rather than "directors" and "employees"

I would add that I do not claim to be an expert in Irish Income Tax, although I do have some knowledge of the Irish (and similar) tax system(s). I have also spoken to others who have more experience of the Irish tax system who support my analysis.

This post does not constitute advice, it is merely my personal interpretaion. If anyone wanted to take advantage of this, they could, of course, ask the Revenue directly or seek specific advice.

squire23

Sorry to be an idiot but I still don't get this - as an employer what's the benefit to me in allowing one of my staff to participate. As far as I can see, I pay out €1000 & they get the tax credits for it. Obviously I've missed something here.

Idleater

squire23 wrote: »

Sorry to be an idiot but I still don't get this ... Obviously I've missed something here.

yes, you deduct the €1000 from the employee's (gross) salary.

irishmotorist

You get a healthy and happy workforce

I don't do tax (obviously I pay it, but I don't understand it), but you buy the bike and your employee pays you back over 1 year. Because the employee pays for it out of their gross, I guess it's the govt that pay the tax difference..