Dáil Éireann Debate, Tuesday - 15 November 2022
198. Deputy Catherine Murphy asked the Minister for Finance the way in which local authority members may access the bike-to-work scheme in their capacity of elected representatives at local government level; and if he has engaged with the Minister for Housing, Local Government and Heritage in respect of their eligibility for the scheme. [56185/22]
View answerThe Deputy’s question relates to the applicability of the ‘Cycle to Work’ scheme to elected representatives at local government level.
Cycle to Work Scheme
Section 118(5G) of the Taxes Consolidation Act (TCA) 1997 provides for the ‘Cycle to Work’ scheme. This scheme provides an exemption from benefit-in-kind (BIK) where an employer purchases a new bicycle and associated safety equipment for an employee or director up to certain limits, and subject to certain conditions being satisfied. Revenue have confirmed that reference to the term employee for the purpose of this scheme includes the holder of an office.
Currently, those limits are €1,250 for a bicycle and €1,500 for electric bicycles. The scheme does not apply to motorbikes, scooters or mopeds and safety equipment does not include child seats or trailers.
Under section 118B TCA 1997 an employer and employee may also enter into a salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary, in exchange for a bicycle and related safety equipment, when certain conditions are met:
1. The bicycle must meet the definition of a ‘pedal cycle’ which means:
- A bicycle or tricycle which is intended or adapted for propulsion solely by the physical exertions of a person or persons seated thereon, or
- A pedelec, being a bicycle or tricycle which is equipped with an auxiliary electric motor having a maximum continuous rated power of 0.25 kilo-watts, of which output is progressively reduced and finally cut off as the bicycle reaches a speed of 25 kilometres per hour, or sooner if the cyclist stops pedaling.
2. The bicycle and related safety equipment must be new and must be purchased by the employer.
3. The bicycle and related safety equipment must be used by the employee or director mainly for the whole or part of their journey to or from work.
4. An employee or director can only avail of the ‘Cycle to Work’ scheme once in any 4-year period, commencing with the date the employee or director is first provided with a bicycle or bicycle safety equipment.
Finance Bill 2022 amendments
I am amending the ‘Cycle to Work’ scheme in the Finance Bill this year to increase the limit on the provision by the employer of a cargo bicycle or e-cargo bicycle and related safety equipment.
The limits that will apply after this change will be as follows:
- The first €1,250 in respect of bicycles and related safety equipment.
- The first €1,500 in respect of electric bicycles and related safety equipment.
- The first €3,000 in respect of cargo bicycles and electric cargo bicycles and related safety equipment.
The Finance Bill 2022 changes, once passed by the Oireachtas, will take effect from 1 January 2023.
Eligibility to the scheme
The cycle to work scheme operates on a self-administered basis, and relief is automatically available provided the employer is satisfied that the conditions of their particular scheme meet the requirements of the legislation.
When determining whether the scheme is available to an individual, Revenue advises that all employers, including Local Authorities in their capacity as employers, give due consideration to these requirements, including the definitions provided in section 116(1) TCA 1997, which, among others, incorporate a definition of:
- ‘employee’, whose definition includes the holder of an office for the purposes of the general provisions of benefit-in-kind, and
- ‘employment’, which is defined as an employment such that any emoluments of the employment would be assessed under Schedule E, and references to persons employed by, or employees of, a body corporate include any person who takes part in the management of the affairs of the body corporate and is not a director of the body corporate.
It should be noted that by virtue of section 120 TCA 1997, the benefit-in-kind provisions, including the exemption from BIK provided for in section 118 (5G) TCA 1997 relating to the ‘Cycle-to-Work’ scheme, apply to public bodies.
As stated above, an exemption from benefit-in-kind applies in relation to the ‘Cycle-to-Work’ scheme, provided the required conditions are met. However, where an employer-employee relationship does not exist, for example, in the case of the self-employed, students, individuals in receipt of social welfare payments or unpaid volunteers, such individuals do not qualify for the scheme.
Comprehensive guidance material on the ‘Cycle to Work’ scheme can be found on Revenue’s website, in Tax and Duty Manual 05-01-01g, available on Revenue’s website.
