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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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CiniO

dogsears wrote: »

Just in case anyone's still interested, the above is correct. At least, I checked it with a colleague who's a PRSI expert and she said its correct. The salary sacrifice used to pay for the bike is recognised in working out if you're over the €352 per week or not and the calculations aren't cumulative over the year so the additional €56 savings on buying a bike under the BTW scheme as set out in the initial post on this should hold.

Thanks very much for confirming.
Great news.

Hurley6969

Could someone let me know what amount you enter on the submit form option on the bikes4work site. Seems like a stupid question I know but work won't entertain any questions on the scheme and the bike shop were not too sure. Does anyone know if it's the full amount of the bike and repayments over x months or do you have to work out the price after the discount and enter that amount and subsequent repayments? Cheers

BoardsMember

Hi. Can someone clear something up for me. As I understand it, the scheme allows an employer to buy a bike in full, with no contributions from me? That would mean it is a very straightforward transaction...employer cannot claim VAT back, but as long as they have an invoice for the purchase there is nothing else to consider, i.e. there are no PRSI implications because there is not salary sacrifice/contribution, no BIK etc. Is this the case? Thanks.

CramCycle

BoardsMember wrote: »

Hi. Can someone clear something up for me. As I understand it, the scheme allows an employer to buy a bike in full, with no contributions from me? That would mean it is a very straightforward transaction...employer cannot claim VAT back, but as long as they have an invoice for the purchase there is nothing else to consider, i.e. there are no PRSI implications because there is not salary sacrifice/contribution, no BIK etc. Is this the case? Thanks.

It would be unusual for an employer not to take the salary sacrifice to recoup the cost of the bike but technically yes, if they done what you say then there would be no BIK, no PRSI implications and they cannot claim the VAT back.

What they essentially are doing is giving you a raise to the value of the bike eg 1000euro for one month and then returning you to your normal salary the next month. They should also keep a record of it for auditing purposes and note it on your payslip for their own record keeping.

Anything over the 1000euro though would be liable for BIK

BoardsMember

Thanks for the reply. Just so I am clear, if the above was the approach chosen by the employer, i.e. they paid 1k for the bicycle, then they would not pay employer PRSI on the 1k, isn't that right? Other than that, the process is simple, they write a cheque to pay the invoice made out to them for a value of 1k including VAT, and make sure not to reclaim VAT on it.

Thanks.

mathie

I contacted a retailer and they said they'd do a cash deal on a bike.

Then they said they'd only honour the deal on Bike to work if my company didn't use a voucher.

Are there different ways my company can pay the shop for the bike?

cython

mathie wrote: »

I contacted a retailer and they said they'd do a cash deal on a bike.

Then they said they'd only honour the deal on Bike to work if my company didn't use a voucher.

Are there different ways my company can pay the shop for the bike?

Yes, after a fashion at least. Some companies elect to go through a middleman (who usually get the gig by making the scheme out to be a lot more complicated to administer than it actually is) who use something like a one4all voucher, but in these cases the middleman takes a commission on your (up to) €1k, and so the bike shop only gets the remainder, and their room to bargain on the price is pretty much removed.

CramCycle

mathie wrote: »

I contacted a retailer and they said they'd do a cash deal on a bike.

Then they said they'd only honour the deal on Bike to work if my company didn't use a voucher.

Are there different ways my company can pay the shop for the bike?

Credit card, Cheque (my company offered both) or cash but this is highly unlikely for obvious reasons. The middle men companies take a 10% cut AFAIK so bike shops have no incentive to discount as a large margin is already taken.

adocholiday

Hi all, apologies if this has already been answered but there are 57 pages on this thread and its not possible to read the lot of them.

I was in the lower tax band until March of this year, then in March had a pay rise which put me into the higher bracket. I bought the bike a month ago and my employer said that I am not eligible for the higher level of savings because I wasn't a full year in the higher tax bracket. I don't know how they conclude this because my understanding is that I will be paying the bike off from June 14 - June 15, all the while being in the higher tax bracket.

Also the first deduction will be in this pay packet, and my understanding is that I have about 60 deducted from my gross salary now (bike and accessories came to €735), with the remainder of my pay being tax deductible. Isn't that how the scheme works?

cython

adocholiday wrote: »

Hi all, apologies if this has already been answered but there are 57 pages on this thread and its not possible to read the lot of them.

I was in the lower tax band until March of this year, then in March had a pay rise which put me into the higher bracket. I bought the bike a month ago and my employer said that I am not eligible for the higher level of savings because I wasn't a full year in the higher tax bracket. I don't know how they conclude this because my understanding is that I will be paying the bike off from June 14 - June 15, all the while being in the higher tax bracket.

Also the first deduction will be in this pay packet, and my understanding is that I have about 60 deducted from my gross salary now (bike and accessories came to €735), with the remainder of my pay being tax deductible. Isn't that how the scheme works?

This depends a lot on how far out of the higher bracket you were until March, and how far inside it you are now, to be honest (not looking for details!), but ultimately (AFAIK) it comes down to where your pay over the course of the year comes in, and where your pay less the cost of the bike comes in. For example, if we say that the delineation is 32800 (it isn't exactly there, but I think it's in the region), and you were bumped to 33000 for the year, but you only get 33000/12 for the months of March-December, and you got (for argument's sake) 30000/12 for the first 2 months. This is 2*2500 + 10*2750 = 32500 which is actually under the threshold for the higher bracket for the year. Now in this case you should not currently be paying any tax at the higher rate, so you can't get the higher relief on the bike.

Even in the case of 33000 for the year in the above example, I am not sure whether you would get the higher rate of relief on all the bike, or just the 200 over the line that you have earned, and lower rate on the rest (up to 800). On the other hand, if your raise has put you to a total of 35k for the year (or something similarly in the clear of the threshold for the higher rate), then I think your employer has erred.

So I hope that all makes some sense, as I don't want to pry for details so better to provide an overly detailed example

CramCycle

Presumably your paying monthly over 12 months, so you will make the savings next year for 5/12 of the bike, and as Cython said, it depends how far into the Higher bracket you jumped but it will only be for 7/12 of the bike.

larryone

Beasty wrote: »

Bike parts or frames do not qualify – it must be a complete bike plus the safety equipment identified above

So I have a really good frame with really crappy components.
I know parts dont qualify, so I can't buy a Deore groupset on its own.
But.
Could I get a bike shop to build a bike for me with the cheapest frame existing (possibly even a child's) but a really good groupset...?
Would this qualify, assuming a bike shop would be ok doing this for me?

Idleater

Yes. Beasty is technically incorrect (in the quote above) , the stipulation is the bike must be complete, not parts.
I specced a frame, groupset and finishing kit for my build.

axcel

Hi

This scheme was just introduced by my employer yesterday, and we've been told that we submit the quote to bike4work, on the first of the next month they'll send my employer an invoice, my employer will send back a cheque and then I get the voucher in the post! Sounds so complicated for a simple process but anyway. I should get the voucher by the 25th of August!

Anyone else had experience of this?
I had been told previously by hr it would only take 5 days for a cheque, but they literally introduced this the day after I got the invoice after spending a couple of weeks finding the right bike. I had stupidly been bargaining on the 5days still.

I'm eager to get the bike before the end of the summer! I emailed One4all yesterday to see if this can be sped up but haven't heard anything yet. Going to call them tomorrow.

But just wanted to see if this was the norm or has anyone managed to get this process sped up? Must be a disaster if you are trying to get a deal or a bike on sale.

Thanks

Beasty

Idleater wrote: »

the stipulation is the bike must be complete, not parts.

Isn't that what I said?

Idleater

Beasty wrote: »

Isn't that what I said?

Most likely, I just read it as no frames at all probably due to sub quoting. I was clarifying :-)

CiniO

dogsears wrote: »

Just in case anyone's still interested, the above is correct. At least, I checked it with a colleague who's a PRSI expert and she said its correct. The salary sacrifice used to pay for the bike is recognised in working out if you're over the €352 per week or not and the calculations aren't cumulative over the year so the additional €56 savings on buying a bike under the BTW scheme as set out in the initial post on this should hold.

Just to double confirm.
It works like you confirmed, so extra savings can be achieved.
Additionally there are even more huge savings possible in certain cases.

Best savings for someone who's not above 41% income tax treshold can be achieved actually for person on fairly low salary.

Example:
Salary €19,300 per annum.
That gives weekly salary of €371.15

If you buy a bike for €1000, and spread your repayments over whole year (52 weeks) - €19.23 weekly - then it comes as follows.

Your weekly wage comes down from €371.15 to €351.92. This puts you below PRSI treshold (employees at €352 or under don't pay PRSI).

So savings are as follows.
20% income tax on €1000 (value of bike) = €200
7% USC on €1000 (value of bike) = €70
4% on whole salary €19,300 = €772
Total savings: €1042

Result is quite ridiculous, but that's exactly how it adds up.
Not only you get your €1000 worth bike for free, but you additionally make 42 quid. Example I choose is the pretty much the best you can get, as once you are below or above €19,300 per annum, your savings will be lower.

Statler

Anyone bought a bike from Canyon through the bike to work scheme lately? They're telling me they can't discount the German VAT rate, which shouldn't be the case as I'm buying it through the company so can provide them with an Irish VAT number, they should discount their VAT rate and the Irish VAT rate is then applied at this end. That's the way it worked the last time I bought from them, now they're telling me it can't be done, just wondering if anyone has any recent experience with them....

TychoCaine

Statler wrote: »

Anyone bought a bike from Canyon through the bike to work scheme lately? They're telling me they can't discount the German VAT rate, which shouldn't be the case as I'm buying it through the company so can provide them with an Irish VAT number, they should discount their VAT rate and the Irish VAT rate is then applied at this end. That's the way it worked the last time I bought from them, now they're telling me it can't be done, just wondering if anyone has any recent experience with them....

That's not how the scheme works. The scheme requires that your employer buys the bike inclusive of VAT. It's not like a normal import/resale where they buy in a good VAT free, apply Irish VAT (which they remit to revenue as part of their normal VAT return) and sell it to you.

Separately, as long as a German seller's sales into Ireland exceed a certain threshold (which I'm certain Canyon's do), they're required to sell the bike to you with Irish VAT rates applied instead of the German rate, but that's all managed by Canyon.

Gary

Beasty

TychoCaine wrote: »

That's not how the scheme works. The scheme requires that your employer buys the bike inclusive of VAT. It's not like a normal import/resale where they buy in a good VAT free, apply Irish VAT (which they remit to revenue as part of their normal VAT return) and sell it to you.

But that's not how VAT works. The VAT rules are set out in the first few posts in the thread.

The employer buys the bike under the normal VAT rules, which in this case means it's treated as zero rated import. The employer then applies Irish VAT when selling the bike to the employee

del_boy13

Beasty wrote: »

But that's not how VAT works. The VAT rules are set out in the first few posts in the thread.

The employer buys the bike under the normal VAT rules, which in this case means it's treated as zero rated import. The employer then applies Irish VAT when selling the bike to the employee

I had a similar experience with Canyon recently so I bought one from Rose instead. Very similar bikes with just slight differences in spec.

Statler

Beasty wrote: »

But that's not how VAT works. The VAT rules are set out in the first few posts in the thread.

The employer buys the bike under the normal VAT rules, which in this case means it's treated as zero rated import. The employer then applies Irish VAT when selling the bike to the employee

Canyon have come back to me and said that due to the high number of people giving VAT numbers to get the German VAT of 19% taken off without the company they work for knowing (meaning the Irish VAT rate is never applied, i.e. tax fraud) that they've introduced a policy of not taking VAT off the invoice. Since it's the Irish taxpayer losing out if people pull this sort of stroke I don't understand Canyon taking this approach, but maybe they're getting grief from the German tax authorities, they suggest that my accounting department can still reclaim the VAT by submitting the invoice with their tax returns but it's going to be too much grief to get them to do this, they're insisting that it has to be done as Beasty described above. Long story short is I won't be buying a Canyon this time, their loss I suppose but I did have my heart set on a CF SLX...

del_boy13 wrote: »

I had a similar experience with Canyon recently so I bought one from Rose instead. Very similar bikes with just slight differences in spec.

Was looking at the Rose site alright, definitely good value, I prefer the look of the Canyon but may well have to change my mind....

drik

Hi All

Silly question but can you buy two bikes under the scheme? My employers run the scheme and I would love a new bike - as would my husband but his employers don't offer the scheme.

I'm guessing its against the rules?

Thanks!

dogsears

drik wrote: »

Hi All

Silly question but can you buy two bikes under the scheme? My employers run the scheme and I would love a new bike - as would my husband but his employers don't offer the scheme.

I'm guessing its against the rules?

Thanks!

Unfortunately not. First problem is your husband would have to get one through his employer and if they don't offer the scheme he can't do it. You can't get one for him through your employers scheme.

And you can only get one bike every 5 years anyway.

You get your bike, and when you replace it in 5 years, you can pass it on to him!;)

CramCycle

drik wrote: »

Hi All

Silly question but can you buy two bikes under the scheme? My employers run the scheme and I would love a new bike - as would my husband but his employers don't offer the scheme.

I'm guessing its against the rules?

Thanks!

It is alas, as I think many would avail of the option if available, best he can hope for is to annoy the hell out of his employer and hope he craves, worth mentioning to then that they save money as well on employers PRSI and the like.

drik

Ah that's a pity. I was going to sacrifice my bike for his if I couldn't buy two. Not to worry. Thanks for answering!

BoardsMember

I need some clarifications on the VAT element.....I'm not 100% clear but I haven't read all 44 pages so please forgive if I have missed it.

If there is no VAT on the invoice to the Employer Company (i.e. Irish VAT number Supplied to German company), does the Employer Company have to apply 23% VAT to the cost of the bike before "selling" the bike to the employee? And then it adds this VAT Amount to the VAT on Sales, so revenue receives the VAT element.

Is this right?

Statler

BoardsMember wrote: »

I need some clarifications on the VAT element.....I'm not 100% clear but I haven't read all 44 pages so please forgive if I have missed it.

If there is no VAT on the invoice to the Employer Company (i.e. Irish VAT number Supplied to German company), does the Employer Company have to apply 23% VAT to the cost of the bike before "selling" the bike to the employee? And then it adds this VAT Amount to the VAT on Sales, so revenue receives the VAT element.

Is this right?

That's it in a nutshell.

jamesd

drik wrote: »

Hi All

Silly question but can you buy two bikes under the scheme? My employers run the scheme and I would love a new bike - as would my husband but his employers don't offer the scheme.

I'm guessing its against the rules?

Thanks!

A friend of mine for 3 bikes for the €1000 total under the scheme.

Beasty

jamesd wrote: »

A friend of mine for 3 bikes for the €1000 total under the scheme.

Your friend broke the law and encouraging others to break the law is not permitted on this site, so please leave it there

Thanks

Beasty