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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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reilig

A quick question:

I want to get a bike on the BTW Scheme at the end of the year. I have approached the company that I work for and they are willing to process the scheme for me - however, they have a problem. We are a small company which is government funded and we get budgets on a monthly basis. There would not be enough money in our budget to buy a bike for €1000 and then allow me pay it back to them. However, in 3 months time, I will have €1000 saved myself. Is there any way that I can give the €1000 to my employer to buy the bike for me and then reclaim the money through tax savings over the 12 months?

Idleater

reilig wrote: »

However, in 3 months time, I will have €1000 saved myself. Is there any way that I can give the €1000 to my employer to buy the bike for me and then reclaim the money through tax savings over the 12 months?

Erm, why do you want to spread the cost over 12 months?
Assuming you earn over €1000 per month then just pay it in one go. That shouldn't impact company budget as they pay the bikeshop instead of you.
This is exactly what happened in my case (also a small company). The Accountants had no problem in doing the BTW scheme as long as I did it in 1 go.

reilig

Idleater wrote: »

Erm, why do you want to spread the cost over 12 months?
Assuming you earn over €1000 per month then just pay it in one go. That shouldn't impact company budget as they pay the bikeshop instead of you.
This is exactly what happened in my case (also a small company). The Accountants had no problem in doing the BTW scheme as long as I did it in 1 go.

Excellent,

I didn't know I could do that. i thought it had to be done over 12 months. Get paid every 2 weeks and it comes to just over €1000 so I'll be able to do it with that

Thanks!!

Beasty

reilig wrote: »

Excellent,

I didn't know I could do that. i thought it had to be done over 12 months. Get paid every 2 weeks and it comes to just over €1000 so I'll be able to do it with that

Thanks!!

Remember it must still be done under formal salary sacrifice arrangements - effectively you will be foregoing most of your pay for one two-week payment cycle

Idleater

reilig wrote: »

Get paid every 2 weeks and it comes to just over €1000 so I'll be able to do it with that

Just as an aside, if you are on the lower tax bracket with the prospect of a raise at some point in the near future it may make more financial sense to wait and buy a bike when on the higher bracket. Certainly if you are spending the maximum (€1000) where the saving is ~470 or ~270. Of course pension, medical and other entitlements should also be factored in to the calculations.

reilig

Beasty wrote: »

Remember it must still be done under formal salary sacrifice arrangements - effectively you will be foregoing most of your pay for one two-week payment cycle

Thanks Beasty. Do I have it correct:

The company buys the bike for €1000 (example price). This €1000 is deducted from my one 2 week payment cycle (which I would be happy with).

I'm on the higher rate of tax so the bike ends up costing me €480 (??)

How or when is the €580 returned to me in tax savings - is it over a 12 month period or is it in 1 lump sum?

Idleater

reilig wrote: »

How or when is the €580 returned to me in tax savings - is it over a 12 month period or is it in 1 lump sum?

it is returned by you not paying it

i.e. the 1000 is removed by your employer from your Gross salary - before deductions. Therefore your taxable income is €1000 less for the year. The monthly credits are your annual credits / 12 and is deducted on a monthly but (probably) paid on an annual basis. It'll be adjusted to work out over the 12 months.

Beasty

€1,000 every 2 weeks suggests you would be a basic rate taxpayer, so I'm guessing that's actually your net rather than gross pay

As Idleater says the tax will actually be adjusted over the full tax year, although as we are now almost 2/3 of the way through it will sort itself out over the remaining months. However if you would otherwise pay higher rate tax on at least €1,000 of your income over the full year you will ultimetely get tax relief at the higher rate (plus levies etc)

reilig

Beasty wrote: »

€1,000 every 2 weeks suggests you would be a basic rate taxpayer, so I'm guessing that's actually your net rather than gross pay

As Idleater says the tax will actually be adjusted over the full tax year, although as we are now almost 2/3 of the way through it will sort itself out over the remaining months. However if you would otherwise pay higher rate tax on at least €1,000 of your income over the full year you will ultimetely get tax relief at the higher rate (plus levies etc)

yes, I have €1600 gross every 2 weeks which puts me into the higher bracket

Thanks for the info guys. Much appreciated.

djburchgrove

Right Guys, thanks for all the info (read the whole thread). I understand I can purchase from anywhere, Online will probably be my option although I have had plenty of people mention the cycle superstore to me.

I am on lower tax rate so I will pay 770 for a 1000 package? Is that Correct?

I am hoping to get a bike with an RRP for about 600 or so, maybe get a 10% discount from the shop and a bitof gear thrown in aswell.

biko

Has anyone managed to get a UK bike on this scheme?
The bikes I like aren't available in Ireland but I found them on chainreactioncycles.
Or can I arrange something with a local, approved, shop? They biy it from UK and I buy it from them?

It's a Electra Townie Balloon btw, or maybe an Amsterdam
http://www.chainreactioncycles.com/Models.aspx?ModelID=20365

Btw, if someone could explain the purchasing process?
I see a bike and work pays for me and my salary is deducted for a year?
Can someone break it down a bit, does work give me the cash to pay for the bike?

Beasty

biko wrote: »

Has anyone managed to get a UK bike on this scheme?
The bikes I like aren't available in Ireland but I found them on chainreactioncycles.
Or can I arrange something with a local, approved, shop? They biy it from UK and I buy it from them?

It's a Electra Townie Balloon btw, or maybe an Amsterdam
http://www.chainreactioncycles.com/Models.aspx?ModelID=20365

Btw, if someone could explain the purchasing process?
I see a bike and work pays for me and my salary is deducted for a year?
Can someone break it down a bit, does work give me the cash to pay for the bike?

I've moved you post into this thread - if you go back through the thread most of your questions are covered

Your bike can be purchased from anywhere, although it's normally more efficient from a VAT and Customs Duty perspective if it's bought from within the EU. There's no need to make any arrangements with any Irish retailer, although your employer would need to understand the mechanics of the VAT treatment set out in one of my early posts in the thread

milltown

I've my bike ordered and the deal is being processed by cyclescheme.ie, as I mentioned earlier in this thread. I just got an e-mail from our HR dept going on about how great the uptake was and all the effort they put in to making the scheme available and yay us etc.
They also say that they want to be clear on how the scheme is run and it turns out that rather than the company buying the bikes (as I understood to be the case in most companies that could afford it) they are getting the money through a finance company and charging €10.29 per month on the gross salary deduction on a €1000 btw deal!

"The maximum gross monthly finance charge before any Income Tax, PRSI and USC savings are taken into account is €10.29, and this is based on an employee opting for the full €1,000 maximum certificate."

Has anyone had anything similar?

I'd understand if it was a small company, like in some of the other posts, but this is a company that makes >$2bn per quarter!

Seaswimmer

milltown wrote: »

I've my bike ordered and the deal is being processed by cyclescheme.ie, as I mentioned earlier in this thread. I just got an e-mail from our HR dept going on about how great the uptake was and all the effort they put in to making the scheme available and yay us etc.
They also say that they want to be clear on how the scheme is run and it turns out that rather than the company buying the bikes (as I understood to be the case in most companies that could afford it) they are getting the money through a finance company and charging €10.29 per month on the gross salary deduction on a €1000 btw deal!

"The maximum gross monthly finance charge before any Income Tax, PRSI and USC savings are taken into account is €10.29, and this is based on an employee opting for the full €1,000 maximum certificate."

Has anyone had anything similar?

I'd understand if it was a small company, like in some of the other posts, but this is a company that makes >$2bn per quarter!

We probably work for the same company!!!

They are saying that you get tax/prsi/USC releif on the finance portion but if you opt for the full €1000 for the bike then you are over the revenue limits (€1123 in total). The finance charge seems to be standard across some of the companies partaking in the scheme. The reason given for the finance arrangement was that the company could not be seen to be giving interest free loans to staff...

Still confused??

Me too..

milltown

Seaswimmer wrote: »

We probably work for the same company!!!

Sounds like it.

kingcharles82

anyone know if the cycle to work scheme is still running, i heard it was ending soon or may have ended, and if it is still running is there much waiting around for a bike after you pick one out in the shop, i heard there can be a delay getting the bike because all the paperwork takes ages?

milltown

It depends entirely on how your employer administers the scheme. In some companies they just give you a company cheque or credit card to buy the bike you want in the local bike shop. In my case I've to wait until the third party the company have engaged get around to sending out the voucher that I can then bring to the bike shop to get the bike I ordered. Six weeks and counting so far.

AFAIK there's no end date for the scheme but I wouldn't bet against it being scrapped in December's budget.

Marcin B

Is it a lot of paperwork for the company's accountants? They refused to participate in the programme claiming that's too much work for them. Do you think they could change their mind if I would tell them that I'd pay in one go?

Idleater

Marcin B wrote: »

Do you think they could change their mind if I would tell them that I'd pay in one go?

Overall it's a small bit of admin, no more than the odd expenses claim I'd reckon. My work stipulated they'd do it but only one payment which definitely minimises the hassle for them. By going monthly they have to oversee the initial purchase and the monthly deduction.
Having said that, if they can do it once they can do it 12 times but that's their call.

Ebbs

Quick question, if I buy a bike on this scheme but my company asks for it over 12 months and not a BIK, I am essentially only paying 58% of the bike's price. The other 42% is being taken from my higher level of tax which I would be paying anyway.

Am I right in my thinking or does it work otherwise?

reilig

I'm sorry for being a pain, but I have one further question:

Our company has agreed to do the BTW Scheme for me, however my boss is confused as to what he needs to do.

Are there any forms that he or the company accountant needs to fill out before they give me the cheque to pay for the bike?

Figure wise:

I earn €1668 gross every 2 weeks. I want to do a salary sacrifice to pay for my new bike, but I want to do it just for the 2 weeks. So am I correct in saying that €1000 will be deducted from the €1668, and I will then receive €668 minus deductions as pay for that 2 week period???

How is the "51%" saving on the bike returned to me? I realise that I wont have to pay tax on this €1000, but will I receive increased tax credits and over what period of time will the 51% be returned to me?

I'm worried that if I buy the bike by salary sacrifice over a 2 week period, then I will only save two weeks worth of tax which is only €416 (instead of of 510)??

Can anyone advise me?
(Sorry, these tax figures confuse me)

lennymc

Couldnt find an answer above - Does anyone know if the once in 5 years rule is per employee or per employment (as in if you change jobs within 5 years can you get another bike on the btw) . I suspect employee, but if its not that would be interesting.....

LightningBolt

If you buy a bike for 600 they reduce your gross salary by 50 a month. Your monthly salary is 3,336. Post deduction it's 3,286.

Tax on your original monthly salary is 3,336 x 50% = 1,668.
Tax on your post deduction salary is 3,286 x 50% = 1,643.

Difference between the 1,668 and 1,643 is 25 i.e. 50% of the 50.

There's your 50% tax saving.

Edit: Reilig - I'm not sure you can do it for just two weeks. If you can you definitely won't get the benefit of the tax saving in your first paycheck. You'd probably need to get in touch with tax office. Regardless, you're going to earn 43,500/44,000 for the year. When it comes to year end your gross pay will be reduced by 1,000 overall meaning you'll pay less tax on the higher rate maximising your tax saving.

reilig

LightningBolt wrote: »

If you buy a bike for 600 they reduce your gross salary by 50 a month. Your monthly salary is 3,336. Post deduction it's 3,286.

Tax on your original monthly salary is 3,336 x 50% = 1,668.
Tax on your post deduction salary is 3,286 x 50% = 1,643.

Difference between the 1,668 and 1,643 is 25 i.e. 50% of the 50.

There's your 50% tax saving.

Edit: Reilig - I'm not sure you can do it for just two weeks. If you can you definitely won't get the benefit of the tax saving in your first paycheck. You'd probably need to get in touch with tax office. Regardless, you're going to earn 43,500/44,000 for the year. When it comes to year end your gross pay will be reduced by 1,000 overall meaning you'll pay less tax on the higher rate maximising your tax saving.

Thanks Lighteningbolt.

I can do it for 2 weeks. I won't get the full benefit of the tax saving in the first pay cheque, however I should receive a tax refund later in the year for the outstanding balance

Anyway, the good news is that my boss told me yesterday to go out and find the bike that I want and to sort out an invoice for him so that he can arrange the payment for it. Going to buy from the LBS. I could probably save some money by buying online or in some of the bigger bike shops in Dublin, but I think its wise to buy local where I can easily bring it back for servicing and repairs.

reilig

lennymc wrote: »

Couldnt find an answer above - Does anyone know if the once in 5 years rule is per employee or per employment (as in if you change jobs within 5 years can you get another bike on the btw) . I suspect employee, but if its not that would be interesting.....

7.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 it again for five years.

www.bikescheme.ie

Its 5 years per employee rather than per employer.

zagmund

Reading through these posts, I'm amazed at the unbelievable way the scheme has been set up. Not surprised, just amazed. There are certain similarities to the CIE Tax Saver scheme & toll schemes.

So, you're entitled to buy from anywhere, but your employer can put restrictions on that. This is if your employer can be bothered to participate in the scheme. In addition, there are several cunningly named intermediaries (cycletowork, biketotheoffice, workbikescheme, whatever) which offer to "help" your employer with the process, but it ends up with you paying a premium, the bike shop pays them a premium and so you lose out potential discount, etc . . . oh, and your employer "can't offer finance terms to allow you spread the cost over a year" so they have to get a finance company in to do this, and guess what . . . more commission/premium.

When I bought my bike, I had to go to the shop, pick my bike, get a quote from the shop on the particular schemes paper, transcribe that all onto a new form on the computer, submit it, wait, get approval, wait, go back to the shop and 'order' the bike with the apporved PO, wait, paperwork was shuffled, wait, cheque appeared on my desk one day, return to bike shop with cheque and pick up bike. From day 1 I was happy to give the shop the dosh up front and sort out the tax side of things later, but this wasn't an option because of "the scheme"

Seriously, what a crock. Why couldn't they implement a scheme like loads of other tax allowances - pay up front, claim at end of year or ring the tax office and get them to put a credit through, etc . . .

z

dcdeerhunter

can i buy a bike from any bike shop or have i to buy it from the shop proposed by my employer

Whitehawk

Any Shop....

CH3OH

Any shop..... your employer picks

Do I pick out the bicycle and equipment from the shop myself?
A. It is for employers to decide how they will operate the scheme. Some employers may allow their employees to select the bicycle and equipment from the retailer of their choice and the employer can then organise appropriate invoicing and delivery arrangements with the retailer. However, other employers may offer more limited options to employees. An employer could, for example, allow an employee to choose only from the range available from a single retailer

TheBlaaMan

dcdeerhunter wrote: »

can i buy a bike from any bike shop or have i to buy it from the shop proposed by my employer

Your employer, buys the bike, not you. You then pay back your employed for it thru a salary deduction. "He who pays the piper, calls the tune....!"