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

cython · 13-08-2015 9:38pm

rubadub wrote: »

The max is 51% if you are in the higher tax bracket. Many shops still have the older 52% quoted.

Actually i think if you're in the highest USC bracket (the new one added in last year's budget) it might go back up to 52%

bradshc · 26-08-2015 12:21am

Hi - hope this is the right way/place to post.
Way back at the very start of this thread BEASTY wrote "you can get up to €1,000 of bike/accessories through your employer, either as a completely free benefit-in-kind (if your employer likes you); or paid for by deductions from your salary, saving you tax, PRSI and levies on the purchase price."

I haven't seen any discussions subsequently about the "completely free" option.

I have a small business and would like to avail of this for two employees without them needing to repay through salary sacrifice.

So the questions I have are..

1) Is "completely free" still an option?
2) How do I go about achieving it... do I simply not ask them to repay via salary sacrifice?
3) Will they definitely not be liable for BIK (so long as they don't exceed €1000)?

Thanks!

Alek · 26-08-2015 12:43am

would like to avail of this for two employees without them needing to repay through salary sacrifice.

Where do I send my CV?

:pac:

CramCycle · 26-08-2015 8:19am

Basically, in the situation you are describing, you have increased their gross wage by 1000euro for one pay packet.

If you insist on giving the bikes free you could give them a 1000 euro bonus the month you get the bikes. Then take it straight back as payment for the bikes.

For your own sake I would definetly include it on their pay packets so it's clear should anyone come back to you.

I will PM you my CV momentarily, what line of work are you in?

Beasty · 26-08-2015 9:16am

bradshc wrote: »

Hi - hope this is the right way/place to post.
Way back at the very start of this thread BEASTY wrote "you can get up to €1,000 of bike/accessories through your employer, either as a completely free benefit-in-kind (if your employer likes you); or paid for by deductions from your salary, saving you tax, PRSI and levies on the purchase price."

I haven't seen any discussions subsequently about the "completely free" option.

I have a small business and would like to avail of this for two employees without them needing to repay through salary sacrifice.

So the questions I have are..

1) Is "completely free" still an option?
2) How do I go about achieving it... do I simply not ask them to repay via salary sacrifice?
3) Will they definitely not be liable for BIK (so long as they don't exceed €1000)?

Thanks!

Employer buys the bike and gifts it to the employee (no salary sacrifice, no payments to or from the employee) - it's as simple as that. There is no benefit in kind if the bike costs no more than €1,000

bradshc · 26-08-2015 10:14am

Thanks all for your replies.
Full disclosure... there are exactly two employees in the company... and I'm one of them!!

Seve OB · 26-08-2015 10:43am

bradshc wrote: »

Thanks all for your replies.
Full disclosure... there are exactly two employees in the company... and I'm one of them!!

and his other half is the other employee

Undercover Elephant · 26-08-2015 10:47am

bradshc wrote: »

Thanks all for your replies.
Full disclosure... there are exactly two employees in the company... and I'm one of them!!

Doesn't matter, as long as you're a PAYE employee. I'm also one of two (albeit part of a bigger group) and checked it out.

CramCycle · 26-08-2015 11:24am

Beasty wrote: »

Employer buys the bike and gifts it to the employee (no salary sacrifice, no payments to or from the employee) - it's as simple as that. There is no benefit in kind if the bike costs no more than €1,000

But I presume, to be above board, it should be noted and come out of the employees salary? Hence my suggestion of a bonus that happens to be the same price.

Otherwise I would have thought you would be liable for BIK as it's a gift.

cython · 26-08-2015 11:40am

CramCycle wrote: »

But I presume, to be above board, it should be noted and come out of the employees salary? Hence my suggestion of a bonus that happens to be the same price.

Otherwise I would have thought you would be liable for BIK as it's a gift.

The wording of the Taxes Consolidation Act actually allows for this

TCA wrote:

(5G)(a) Subject to paragraph (c) of this subsection, subsection (1) shall not apply to expense of up to €1,000 incurred by the body corporate in, or in connection with, the provision for a director or employee of a bicycle or bicycle safety equipment, where—

(i) the bicycle and bicycle safety equipment provided is unused and not second-hand,

(ii) the director or employee uses the bicycle or bicycle safety equipment, or the bicycle and the bicycle safety equipment, as the case may be, mainly for qualifying journeys, and

(iii) bicycles or bicycle safety equipment, or bicycles and bicycle safety equipment, as the case may be, are made available generally to directors and employees of the body corporate.

(b) In this subsection—

"bicycle" means a pedal cycle;

"bicycle safety equipment" includes—

(i) bicycle bells and bulb horns,

(ii) bicycle helmets that conform to European product safety standard CEN/EN 1078,

(iii) bicycle lights, including dynamo packs,

(iv) bicycle reflectors and reflective clothing, and

(v) such other safety equipment as the Revenue Commissioners may allow;

"normal place of work" means the place where the director or employee normally performs the duties of his or her office or employment;

"pedal cycle" means—

(i) a bicycle or tricycle which is intended or adapted for propulsion solely by the physical exertions of a person or persons seated thereon, or

(ii) a pedelec,

but does not include a moped or a scooter;

"pedelec" means a bicycle or tricycle which is equipped with an auxiliary electric motor having a maximum continuous rated power of 0.25 kilowatts, of which output is progressively reduced and finally cut off as the vehicle reaches a speed of 25 kilometres per hour, or sooner if the cyclist stops pedalling;

"qualifying journey", in relation to a director or employee, means the whole or part of a journey—

(i) between the director’s or employee’s home and normal place of work, or

(ii) between the director’s or employee’s normal place of work and another place of work, where the director or employee is travelling in the performance of the duties of his or her office or employment.

(c) A director or employee shall not, by virtue of this subsection, be relieved from a charge to income tax under subsection (1) more than once in any period of 5 consecutive years of assessment, commencing with the year of assessment in which the director or employee concerned is first provided with a bicycle or bicycle safety equipment.

where "subsection (1)" deals with BIK, and reads as

TCA wrote:

(1) Subject to this Chapter, where-

(a) a body corporate incurs expense in or in connection with the provision, for any of its directors or for any person employed by it in an employment to which this Chapter applies, of-

(i) living or other accommodation,

(ii) entertainment,

(iii) domestic or other services, or

(iv) other benefits or facilities of whatever nature, and

(b) apart from this section the expense would not be chargeable to income tax as income of the director or employee,

then, sections 112, 114 and 897 shall apply in relation to so much of the expense as is not made good to the body corporate by the director or employee as if the expense had been incurred by the director or employee and the amount of the expense had been refunded to the director or employee by the body corporate by means of a payment in respect of expenses, and income tax shall be chargeable accordingly.

So basically BIK does not apply to a give of a bicycle and associated safety equipment up to €1,000 every 5 years would be my reading of it.

Undercover Elephant · 26-08-2015 11:50am

Good to know that our legislators are thorough enough to count bulb horns as safety equipment.

Taxuser1 · 26-08-2015 11:59am

i saw a few VAT issues here, working in that field myself, hopefully this helps

First of all, the sale by an EU registered bike supplier to an Irish employer is called an Intra Community Acquisition and would be made without charging VAT on what is called the reverse charge basis. The Irish employer self accounts for the deemed VAT in his own VAT return. it doesn't cost the employer anything.

All online stores engage in what are called distance selling. As one poster pointed out, where a threshold of €35,000 is reached with a particular country, the international supplier is obliged to register and account for Irish VAT. Anotehr pointed out that Wiggle, Chain Reaction etc do this and that's correct - you will be charged Irish VAT

However, where the value of an EU purchase exceeds €1,000 it gets tricky for the employee. The likes of Canyon Rose etc should invoice for the value of the bike with no VAT, let's say 5 grand for example. As the Bike to Work only allows 1,000, the 4000 becomes payable to the employer. Only when that is paid should the employer action the invoice to Canyon.

But the employee also has an obligation back to the employer for the VAT on the 5,000 that is due. So the cost to the employee is the 1000 through salary sacrifice, 4,000 on top by way of straight payment, plus the VAT due on 5,000 x 23% = 1,150 to the employer who will want that straight away in the month you get the bike.

Beasty · 26-08-2015 12:08pm

CramCycle wrote: »

But I presume, to be above board, it should be noted and come out of the employees salary? Hence my suggestion of a bonus that happens to be the same price.

Otherwise I would have thought you would be liable for BIK as it's a gift.

No - it's a non-taxable benefit in kind. As set out by cython there is specific exemption

The whole rationale behind the legislation (which was building on, albeit much more generously, the UK scheme) was to prove a BIK exemption. All the salary sacrifice stuff is arguably an add-on (although based on existing tax practice and legislation) to incentivise employers to provide schemes as they can pass on the cost to the employee (while retaining a PRSI benefit themselves)

cython wrote: »

So basically BIK does not apply to a give of a bicycle and associated safety equipment up to €1,000 every 5 years would be my reading of it.

Correct

Taxuser1 · 26-08-2015 12:15pm

Taxuser1 wrote: »

i saw a few VAT issues here, working in that field myself, hopefully this helps

First of all, the sale by an EU registered bike supplier to an Irish employer is called an Intra Community Acquisition and would be made without charging VAT on what is called the reverse charge basis. The Irish employer self accounts for the deemed VAT in his own VAT return. it doesn't cost the employer anything.

All online stores engage in what are called distance selling. As one poster pointed out, where a threshold of €35,000 is reached with a particular country, the international supplier is obliged to register and account for Irish VAT. Anotehr pointed out that Wiggle, Chain Reaction etc do this and that's correct - you will be charged Irish VAT

However, where the value of an EU purchase exceeds €1,000 it gets tricky for the employee. The likes of Canyon Rose etc should invoice for the value of the bike with no VAT, let's say 5 grand for example. As the Bike to Work only allows 1,000, the 4000 becomes payable to the employer. Only when that is paid should the employer action the invoice to Canyon.

But the employee also has an obligation back to the employer for the VAT on the 5,000 that is due. So the cost to the employee is the 1000 through salary sacrifice, 4,000 on top by way of straight payment, plus the VAT due on 5,000 x 23% = 1,150 to the employer who will want that straight away in the month you get the bike.

i realise i'm coming very late to the party here and hadn't bothered to check the 80 pages of previous posts where this was probably explained even more so.

Apologies Beasty and co !

micar · 27-08-2015 10:30am

The scheme has been a massive success.

Has there been any calls to reduce the number of years you can avail down from 5 years?

3 years would be perfect.

BTW my 5 years is up this year.

rubadub · 27-08-2015 10:40am

micar wrote: »

The scheme has been a massive success.

How do you measure/figure this?

A while ago I was asking if there was any chance of it going up in value and people said it was more likely to be scrapped.

The scheme is widely abused.

Beasty · 27-08-2015 11:00am

A decent commuting bike should last for 5 years. Lobbying to get it down to 3 years may only highlight perceived abuse

dahat · 27-08-2015 4:51pm

Hi folks.

Looking to get my second B2W in January. Previous bike was a Giant Roam2, still motoring away for me.

I am looking to get a Road Bike now and been in with my LBS just now but they tell me my preferred 2015 Giant Defy 1 is and will be out of stock at my purchase time.

The 2016 model will be available but I see the Defy 1 will be disc brakes and am increase to €1400 or a little less. I don't mind adding a little to the €1000 but €400 is alot really.

Could anyone suggest a similar model with a full 105 groupset at €1200 Max.

Thanks for any replies.

RainyDay · 30-08-2015 11:13am

rubadub wrote: »

How do you measure/figure this?

A while ago I was asking if there was any chance of it going up in value and people said it was more likely to be scrapped.

The scheme is widely abused.

What kind of abuse? I know there is no monitoring to see if people actually do cycle to work. To be honest, if someone is buying a bike and using it for non-work travel, that really wouldn't bother me hugely. It's still one more bike and usually one less car on the road for certain periods.

I've heard stories about it being used for lawnmowers and other goods from hardware shops, but I'm not sure this is a big problem.

iwillhtfu · 30-08-2015 12:21pm

RainyDay wrote: »

What kind of abuse? I know there is no monitoring to see if people actually do cycle to work. To be honest, if someone is buying a bike and using it for non-work travel, that really wouldn't bother me hugely. It's still one more bike and usually one less car on the road for certain periods.

I've heard stories about it being used for lawnmowers and other goods from hardware shops, but I'm not sure this is a big problem.

Afaik it only has to be a portion of your trip to work it doesn't have to be the entire journey.

So you could be cycling to the train/bus and I guess essentially you could cycle the length of your driveway and get in your car and it would be considered a portion of your commute.

i think the days of people buying lawn mowers etc on it are gone.

The biggest issue now is people using multiple vouchers to buy one bike and bike stores are culpable in this scenario aswell.

fat bloke · 30-08-2015 12:46pm

If you ask me, the one thing that continually surprises me is how FEW people have used the scheme. I work in a school with 18 to 20 members of staff, all eligible, and only myself and one other hand used the scheme. Ditto my wife who works in the civil service, generally speaking it's primarily younger fitter people who already cycle who have availed of the btw. Preaching to the converted for the most part I reckon.

Beasty · 30-08-2015 1:16pm

6 of us have availed in my company (comprising about a third of the workforce). Probably only me doing much cycling beforehand, with one taking it up much more seriously as a result and without doubt benefiting healthwise, and another two continuing their regular commuting since getting their bikes 2-3 years ago. The other two have "fallen by the wayside".

Overall I consider the 3 "successes" outweigh the 2 "failures" (and dozen or so "DNS"s) so would argue it has been an overall success at my employer

RainyDay · 30-08-2015 1:28pm

iwillhtfu wrote: »

The biggest issue now is people using multiple vouchers to buy one bike and bike stores are culpable in this scenario aswell.

How does this work? I get my mate (who will never cycle in a million years) to claim for a bike, and put two vouchers together to buy a €2k bike?

iwillhtfu · 30-08-2015 1:38pm

Hmm I probbaly shouldnt answer but quickly..

It's illegal btw but allegedly that does go on with the store claiming two invoices/sales but obviously only one bike being bought.

RainyDay · 30-08-2015 1:56pm

iwillhtfu wrote: »

Hmm I probbaly shouldnt answer but quickly..

It's illegal btw but allegedly that does go on with the store claiming two invoices/sales but obviously only one bike being bought.

But you need two people to conspire for this - right? Maybe a husband/wife?

iwillhtfu · 30-08-2015 4:28pm

RainyDay wrote: »

But you need two people to conspire for this - right? Maybe a husband/wife?

Yes and a willing salesman which isn't hard to find. Plenty of people buying 5k bikes that wouldn't have a pot to pee in.

Anyway it's all here say and probably shouldn't be discussed on here so I'll leave it there.

RainyDay · 30-08-2015 9:32pm

iwillhtfu wrote: »

Yes and a willing salesman which isn't hard to find. Plenty of people buying 5k bikes that wouldn't have a pot to pee in.

Anyway it's all here say and probably shouldn't be discussed on here so I'll leave it there.

Tks for clarification. I don't think there is anything unethical or questionable about discussing such frauds. It is very foolish for anyone to conspire with a workmate on tax fraud. You'd never know when a work relationship is going to go sour or off the boil, so it's not a great idea to leave evidence like this hanging around.

commited · 31-08-2015 9:49am

dahat wrote: »

Hi folks.

Looking to get my second B2W in January. Previous bike was a Giant Roam2, still motoring away for me.

I am looking to get a Road Bike now and been in with my LBS just now but they tell me my preferred 2015 Giant Defy 1 is and will be out of stock at my purchase time.

The 2016 model will be available but I see the Defy 1 will be disc brakes and am increase to €1400 or a little less. I don't mind adding a little to the €1000 but €400 is alot really.

Could anyone suggest a similar model with a full 105 groupset at €1200 Max.

Thanks for any replies.

This is what I'm looking at, fresh for 2016 - Cube Attain SL @ €1269:
http://www.cube.eu/en/products/road-race/attain/cube-attain-sl-blacknflashred-2016/
(the price is frustrating as it's €1199 in Europe)

If you want a carbon frame:
http://planetxireland.com/products-page/road/planet-x-pro-carbon-shimano-105-5800-road-bike/

I originally started out looking at the Giant Defy 1, but I tried a Cube Peleton Race (no longer available) and was very impressed. Unless I can find something decent in the end of year sales from last years stock, I'll be ordering the Attain

Such a pity Canyon don't have an Irish stockist as I'd love one of their bikes

josip · 31-08-2015 9:49am

RainyDay wrote: »

.... You'd never know when a work relationship is going to go sour or off the boil, so it's not a great idea to leave evidence like this hanging around.

Not just work relationships; ask Fred Forsey

Einstein? · 01-09-2015 9:06pm

Anyone know how long the whole process takes? Will be going to a bike shop on a Wednesday and getting the stuff for HR the next day. What's the likelihood I'll have my new bike ready for a sportive a week after that?

Edit; that Attain looks nice - any bikeshops doing it or how to get with b2w?

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

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