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On 1 January 2009 a new government scheme to encourage people to cycle to work came into force. Cycling keeps you fit, it’s fast, cheap and reliable – and it’s good for the environment.
The new bike scheme covers bicycles and accessories up to a maximum cost of €1,000. The bicycle must be purchased by your employer but the scheme can then operate either with your employer bearing the full cost of the bicycle, or by way of a salary sacrifice agreement (like the existing travel card scheme) in which you pay for it, tax free, over 12 months.
Participating in the bicycle scheme is easy. If your employer decides to take part, they simply buy the bike and equipment on your behalf and off you go. Its is up to you and your employer to decided whether they buy the bike outright for you or whether you pay for it via ‘salary sacrifice’. Either way you save on tax.
The scheme is flexible in its application in that your employer doesn’t have to specifically notify the Revenue Commissioners that you’re availing of the scheme and there are no Government forms to fill out. However, your employer does have to maintain the normal records such as invoices and payment details associated with buying the bike.
You can find answers to more questions on out the FAQ page - just click on the icon to your right!
Cycling to work is a win-win-win situation – get involved!
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How to claim
Who is eligible for the tax exemption?
Employees are eligible for the exemption through the participation of their employer, who must operate the scheme. The cost of the bike can be funded either directly by the employer or through a salary sacrifice arrangement with the employee. If the bicycle is purchased directly by the employer, it can be claimed as a tax exempt benefit in kind. Where it is financed via a salary sacrifice, the employee saves on income tax, levies and PRSI.
How does it work?
The employee chooses the bicycle and equipment he or she wants and the employer purchases the on his or her behalf. Tax relief is available on purchases up to a maximum value of €1,000.
When does the exemption begin?
The scheme, which was introduced by the Green Party in the 2008 budget, came into operation on 1 January 2009.
What sort of equipment is covered by the scheme?
Tax relief is available on a wide range of cycling gear and equipment – pretty much everything you would need. This list includes helmets, lights, locks, bells, mirrors, cycle clips, panniers, luggage carriers & straps, pumps, puncture repair kits, cycle tool kits, reflective clothing and reflectors.
Is there a limit to the number of employees in a company who can participate?
Once an employer agrees to participate, there is no limit to the number of employees who can avail of the scheme. However, the scheme can only be used by an employee once every five years.
Why is the scheme being brought in?
The Government is trying to encourage commuters to give up the car for shorter journeys. In Dublin, a city well suited to cycling, only 3-4% of commuters cycle to work. By contrast, in Copenhagen over one third of commuters get to work on the bike. More people cycling to work reduces traffic congestion, improves fitness levels and reduces our carbon dioxide emissions
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Info for employers
PLEASE NOTE
This page gives general information. If you have any specific questions on Benefit- in-Kind please telephone the Revenue Commissioners’ Employer Information and Customer Service Unit on 1890 25 45 65
Cycling offers real benefits to employers such as freeing up valuable land for development, creating a healthier workforce, helping staff get to work more reliably, as well as helping the more general business climate through reducing congestion and pollution.
Large numbers of people already cycle to work. By doing so they do their employer, the local community and the environment a huge favour. They deserve to be looked after! Many more people would willingly cycle given better conditions and proper support at the workplace.
Become a cycle friendly employer
A cycle-friendly employer is an organisation that does more than simply tolerate cycling. It understands and values the benefits of cycling. It provides good facilities, offers support and encouragement, and actively promotes cycling amongst the workforce.
No organisation is perfect. Every organisation could do a little bit more to encourage cycling. Cycle-friendliness should be regarded as a journey, rather than a destination. And even the longest journey (as the saying goes) begins with a single step.
One large company, when asked why it was so keen to promote cycling, called its policy ‘enlightened self-interest’. The ‘enlightened’ bit is easy to understand:
* Bicycles are kind to the environment
* They are quiet and pollution-free.
* Cycling helps create safer, more neighbourly communities.
* Cycling is part of the solution to our traffic congestion problems.
And ‘self-interest’? Employers have a lot to gain from cycling:
* Regular cyclists tend to be fitter and healthier than non-cyclists. This contributes towards greater productivity and lower rates of absenteeism due to illness
* Bikes are nimble vehicles, able to squeeze past the queues and the road-works. So cyclists tend to be more punctual employees.
* People want to cycle. So why hold them back? Give cyclists the facilities and the support that they deserve and you get a happier and more motivated workforce.
* Be seen to be green. The media are interested in cycling stories.
* Being a cycle-friendly employer is a way of winning valuable publicity at relatively little cost.
* Impress your local authority. Increasingly, planning consent comes with strings attached – employers must develop Travel Plans. If you’re a cycle-friendly employer you’re well on the way to having a credible plan.
Getting started
Begin by talking! In most organisations the word ‘bicycle’ rarely gets a mention So, as a first step, you need to get cycling onto people’s agendas and make it a live issue.
Arrange meetings with relevant managers and senior staff. Be flexible and fit in with their schedules. Keep it brief - they’re busy people. Go into the meeting with a set of ideas and proposals both large- and small-scale. Suggest cheap, quick fixes as well as more expensive, long term schemes. Put the case for cycling firmly, but be prepared to listen and to make compromises. Take notes and record action points. Agree the outcome of the meeting, get a follow-up meeting into your diaries.
Who should you be talking to? Almost everyone! Key people include:
* Colleagues. Your organisation’s regular cyclists are obvious contacts. But see if you can identify occasional and potential cyclists too. If there is sufficient interest and enthusiasm amongst colleagues, you might consider forming a Bicycle User Group. Click here for more information about BUGs.
* Site Manager, Estates Manager, Buildings Manager, etc. These people look after your organisation’s infrastructure and are the people to talk to about bike parking, lockers, showers and other facilities.
* Public Affairs Officer, Press Officer. Make these people aware of cycling’s news value. Show them the sort of press coverage that other organisations have gained as a result of cycling initiatives.
* Human Resources Manager, Personnel Officer. The people who look after recruitment and employee welfare are likely to consider a commitment to cycling a valuable ‘selling feature’ when it comes to recruiting and retaining high quality staff.
* Environmental Officer. An obvious choice.
* Travel Planner. Another essential contact. Cycling has a key role to play in any organisation’s commuting strategy.
* Others.You will find support for cycling in all kinds of quarters. Take time to seek people out and raise the issue. Senior managers or directors that cycle (or who are at least sympathetic towards cycling) are worth their weight in gold!
* Local authorities. A valuable source of advice and support.
Cycle to work scheme
The government's cycle to work scheme came into operation on 1 January 2009.
The purposes of the scheme are:
* To encourage more employees to cycle to and from work
* To contribute to lowering carbon emissions
* To help reduce traffic congestion
* To help improve health and fitness levels.
Benefit-in-kind exemption
Under the scheme, an employer may provide an employee with a bicycle and/or cycle equipment without the employee being liable for benefit-in-kind taxation.
The scheme may also be implemented under a salary sacrifice arrangement through the employee’s payroll (in a similar manner to the existing Travel Pass Scheme). Under such an arrangement, the employer provides the bicycle and/or equipment to the employee who agrees to forego or sacrifice part of his or her salary every pay period (weekly/fortnightly/monthly as the case may be), in order to cover the cost of the benefit. The full cost must be recovered within a maximum period of twelve months and the salary sacrifice will be reflected in the employee’s pay over that period.
Benefits for employee and employer
Because the bicycle and/or equipment are exempt from tax, the employee will not be liable to income tax at his or her marginal rate, employee’s PRSI, or levies on the cost of the benefit, as reflected in the amount of salary sacrificed.
The employer will also benefit in that employer’s PRSI is not payable on the cost of the bicycle and/or safety equipment.
Employers will not be able to reclaim the VAT paid on the bicycle and/or safety equipment.
Participation
Participation in the scheme is voluntary for employers. However, when an employer agrees to participate, he or she must make the scheme generally available, on an equal basis, to all employees requesting it.
There are no in built restrictions in the scheme regarding where the bicycle and associated safety equipment can be purchased. This is a matter for employers as they will be purchasing the bicycles and safety equipment in all instances.
Qualifying journeys
The bicycle must be used by the employee mainly for qualifying journeys. This means the whole or part (e.g. between home and train station) of a journey between the employee’s or director’s home and normal place of work, or between his or her normal place of work and another place of work. While an employer will not be required to monitor the use of the bicycle/safety equipment, the employer will be required to obtain a signed statement from the employee or director that the bicycle is for his or her own use and will be used mainly for qualifying journeys
Types of bicycles and equipment
The exemption will cover pedal bicycles and tricycles, and pedelecs (an electrically assisted bicycle which requires some effort on the part of the cyclist in order to effect propulsion). It will not cover motorbikes, scooters or mopeds.
The following equipment will be covered by the exemption:
* Cycle helmets which conform to European standard EN 1078
* Bells and bulb horns
* Lights, including dynamo packs
* Mirrors and mudguards
* Cycle clips and dress guards
* Panniers, luggage carriers and straps to allow luggage to be safely carried
* Locks and chains to ensure cycle can be safely secured
* Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs
* Reflective clothing along with white front reflectors and spoke reflectors.
Conditions
1. The bicycles and/or safety equipment must be purchased by the employer.
2. The tax exempt benefit-in-kind for the bicycle and safety equipment will only apply where the employee agrees to use the bicycle to cycle to and from work or between workplaces.
3. The tax exempt benefit-in-kind will be limited to €1,000. Where the cost exceeds this amount, a BIK charge will apply to the balance.
4. Under any salary sacrifice arrangement, the cost of the bicycle and/or safety equipment must be paid within twelve months.
5. The tax exempt benefit-in-kind may only be provided to an individual employee once in a five year period.
6. Electric bikes (also known as 'pedelecs') are eligibile for the scheme; including 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
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.
8. It is not envisaged, at this stage, that there will be a notification process involved but the purchase of bicycles and associated safety equipment by employers for employees will be subject to the normal Revenue audit procedure with the normal obligations on employers to maintain records (e.g. invoices, salary sacrifice agreements between employer and employee, such agreements to include a statement from employees that the bicycle/bicycle safety equipment is for their own use and will be used for travelling to and from work).
Next step: Download an Info Pack.
Provision of Bicycles for Directors and Employees
- Exemption from Income Tax in respect of
Benefit-In-Kind
Guidance Document
December 2008
1. Introduction
Section 7 of the Finance (NO. 2) Bill 2008 proposes the introduction of a
tax incentive aimed at encouraging more employees to cycle to and from
work. The proposal is to exempt from income tax the benefit-in-kind
arising from the provision of a bicycle/bicycle safety equipment by an
employer to an employee or director, where the bicycle/associated safety
equipment is used by the employee or director mainly for qualifying
journeys.
2. Effective date
The exemption will apply to expenditure incurred by an employer on or
after 1 January 2009.
3. Limits
There will be a limit of €1,000 on the amount of expenditure an employer
can incur in respect of any one employee or director. 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.
4. Qualifying journeys
The bicycle/safety equipment must be used by the employee or director
mainly for qualifying journeys. This means the whole or part (e.g.
between home and train station) of a journey between the employee’s or
director’s home and normal place of work, or between his or her normal
place of work and another place of work. While an employer will not be
required to monitor the use of the bicycle/safety equipment, the employer
will be required to obtain a signed statement from the employee or
director that the bicycle is for his or her own use and will be used mainly
for qualifying journeys.
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5. Qualifying bicycles/safety equipment
The exemption will cover pedal bicycles and tricycles, and pedelecs (an
electrically assisted bicycle which requires some effort on the part of the
cyclist in order to effect propulsion). It will not cover motorbikes,
scooters or mopeds.
The following safety equipment will be covered by the exemption:
!" Cycle helmets which conform to European standard EN 1078
!" Bells and bulb horns
!" Lights, including dynamo packs
!" Mirrors and mudguards to ensure riders visibility is not impaired
!" Cycle clips and dress guards
!" Panniers, luggage carriers and straps to allow luggage to be safely
carried
!" Locks and chains to ensure cycle can be safely secured
!" Pumps, puncture repair kits, cycle tool kits and tyre sealant to
allow for minor repairs
!" Reflective clothing along with white front reflectors and spoke
reflectors
6. Provision of bicycles/safety equipment to all employees and
directors
The exemption will only apply where bicycles/safety equipment are made
available by the employer generally to all of its directors and employees.
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7. Purchase of bicycles/safety equipment
The employer must purchase the bicycle/safety equipment. The
exemption will not apply where an employee or director purchases a
bicycle/safety equipment and gets reimbursed by his or her employer.
8. Salary sacrifice arrangements
Similar to the travel pass scheme, an employer and employee may enter
into a salary sacrifice arrangement whereby the employee agrees to
forego part of his or her salary to cover the costs associated with the
purchase of the bicycle/safety equipment. In such circumstances, the
employee will not be liable to tax or PRSI or levies on the salary forgone.
Where salary sacrifice arrangements are used, they must be completed
over a maximum of 12 months from the date of provision of the
bicycle/safety equipment.
In the specific context of the provision of a bicycle/bicycle safety
equipment, Revenue will be prepared to regard salary sacrifice
arrangements which meet the following conditions as being effective for
tax purposes:
- There must be a bona fide and enforceable alteration to the terms
and conditions of employment (exercising a choice of benefit
instead of salary).
- The alteration must not be retrospective and must be evidenced in
writing.
- There must be no entitlement to exchange the benefit for cash.
- The choice exercised (i.e. benefit instead of cash) cannot be made
more frequently than once in a 5- year period.
- The choice exercised (i.e. benefit instead of cash) must be
irrevocable for the relevant year for which it is made.
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9. Miscellaneous Questions and Answers
9.1 Will an employee be able to avail of the exemption where an
employer spends in excess of €1,000?
Yes, but only the first €1,000 will be exempt from the benefit-in-kind
charge to income tax.
9.2 Where an employer incurs an expense of less than €1,000 in year
one in the provision of a bicycle and/or associated safety equipment,
will the employee be able to claim exemption from the benefit-in-kind
charge in respect of the difference between €1,000 and the amount
spent by the employer, within the 5- year period?
No. An employee can only avail of the exemption once in every 5 years.
It does not matter that he or she may have been exempted from a benefitin-
kind charge for an amount less than €1,000. The exemption is
available once in every 5 year period.
9.3 Will the exemption apply to expenditure incurred by an employer
in the purchase of bicycle parts rather than a whole bicycle?
No. The exemption only applies to expenditure incurred in the purchase
of a whole bicycle or associated safety equipment.
9.4 Will the exemption apply where the employer does not provide
bicycles but incurs expenditure on the purchase of bicycle safety
equipment?
Yes. The rules regarding the €1,000 limit on expenditure and the
availability of the exemption once in every 5-year period will apply in the
case of bicycle safety equipment, as it will in the case of bicycles.
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9.5 Can an employee buy the bicycle/safety equipment and get a
refund from his or her employer?
No. The employer must purchase the bicycle/safety equipment.
9.6 Can a bicycle be bought anywhere, e.g. online from abroad, or
will it have to be bought in Ireland or from a pre-approved selection
of shops?
There are no limits as to where the bicycle should be purchased by the
employer.
9.7 Can employees choose the bicycle/safety equipment themselves?
It is for employers to decide how they will operate the scheme. Some
employers may allow employees to select the bicycle/safety equipment
from the retailer of their choice and the employer may then put in place
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.
9.8. Will there be any minimum threshold on the amount of days a
bicycle must be used?
There will be no threshold on the amount of days a bicycle should be
used. However, the bicycle must be used mainly for qualifying journeys
(i.e. travelling to and from work or between work places).
9.9 How will the exemption operate? Does an employer have to notify
Revenue that they are providing bicycles/safety equipment for
directors and employees? What kind of documentation is required?
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There will be no notification process involved but the purchase of
bicycles and associated safety equipment by employers for directors and
employees will be subject to the normal Revenue audit procedure with
the normal obligations on employers to maintain records (e.g. delivery
dockets, invoices, payments details, salary sacrifice agreements between
employer and employee, signed statements from employees that the
bicycle/bicycle safety equipment is for own use and will be used for
travelling to and from work).
9.10 Is an employer liable to pay VAT on bicycles/safety equipment
purchased for employees and directors? Can an employer claim an
input credit in respect of the VAT?
Yes, VAT is payable. The employer will not be able to claim an input
credit in respect of the VAT payable as the bicycles will not be used for
the purposes of taxable supplies.
9.11 If the employer incurs delivery charges in respect of the
bicycles/safety equipment, will these be covered by the exemption?
Yes, provided the maximum value of the benefit, including delivery
charges, does not exceed €1,000. The exemption is limited to the first
€1,000 - where the cost exceeds this amount, a benefit-in-kind income tax
charge will apply to the balance.
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Queries on the exemption from benefit-in-kind charge in respect of
bicycles/safety equipment provided to employees and directors.
!"Employers
Please contact:
Employer Information and Customer Service Unit
Telephone: 1890 25 45 65
If calling from outside the Republic of Ireland please phone
+ 353 67 63400
E-mail: employerhelp@revenue.ie
!"Employees
Please contact your local Revenue office.
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