Dáil Éireann Debate, Tuesday - 19 October 2021
354. Deputy Duncan Smith asked the Minister for Finance his plans to extend the bike to work scheme to allow those outside of employment including those on social welfare payments to access the scheme; if he plans to also expand it to include students and children attending school; and if he will make a statement on the matter. [51181/21]
Amharc ar fhreagraSection 118(5G) of the Taxes Consolidation Act 1997 (TCA 1997) provides for the ‘Cycle to Work’ scheme. This scheme provides an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and associated safety equipment for an employee. The scheme is designed to be administratively simple in order to encourage employers to participate.
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.
Where a bicycle or safety equipment is purchased under the ‘Cycle to Work’ scheme or through a salary sacrifice arrangement certain conditions must be met, for example:
- The exemption applies to the first €1,250 of expenditure incurred by the employer in obtaining a bicycle and related safety equipment. This exemption limit is increased to €1,500 for pedelecs or ebikes and related safety equipment. Employers may incur costs in excess of these limits, but any such excess will not qualify for the exemption and will be liable to tax. A salary sacrifice arrangement is subject to the same monetary limits.
- The bicycle and related safety equipment must be new and must be purchased by the employer.
- 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.
- An employee or director can only avail of the ‘Cycle to Work’ scheme once in any 4 year period. A salary sacrifice arrangement is subject to the same time limits and any salary sacrifice arrangement entered into must be completed within a 12 month period.
The ‘Cycle to Work’ scheme is only applicable where the bicycle and safety equipment is provided by an employer to either a director or someone in its employment.
Thus, where an employer-employee relationship does not exist, for example, in the case of self-employed individuals, students, retired individuals, job seekers or those in unpaid work, such individuals cannot qualify for the scheme. Likewise, salary sacrifice arrangements may only be entered into between an employer and a director or employee.
Further guidance regarding the scheme can be found on Revenue’s website.
While the scheme is kept under review by my officials, I have no plans at present for its expansion.
