Dáil Éireann Debate, Thursday - 28 April 2022
66. Deputy Marc Ó Cathasaigh asked the Minister for Finance his views on the expansion of the bike to work scheme in order to include businesses set up as sole trader or partnership arrangements, as the scheme currently applies only to limited company status; and if he will make a statement on the matter. [20493/22]
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 or director.
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.
These conditions include the following:
1. The bicycle must meet the definition of a ‘pedal cycle’. A ‘pedal cycle’ 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 pedalling.
2. 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.
3. The bicycle and related safety equipment must be new and must be purchased by the employer.
4. 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.
5. 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. Prior to 1 August 2020 an employee or director could only avail of the Cycle to Work scheme once in any 5-year 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, such individuals cannot qualify for the scheme themselves. However, if a self-employed person employs people, those employees may avail of the scheme (subject to meeting the required conditions). As such, the scheme is not limited to employees of companies only.
