Cycling to work could be a lot of fun!
Information and rules for the operation of the salary sacrifice scheme in conjunction with Raleigh2Work for the provision of bicycles and equipment.
What is the scheme?
The cycling initiative allows employees to purchase a bike and associated equipment tax free. This is the carrot the Government is using to get motorists out of their cars and cycling to work. The Government wants 10 per cent of all journeys by 2020 to be undertaken by bicycle and has introduced the scheme to persuade 150,000 commuters to use the bicycle for short journeys. Currently just 4 per cent of Dublin commuters travel by bicycle to work, one of the lowest figures in Europe. The Minister for the Environment John Gormley has announced a €5 million initiative in his carbon budget to upgrade cycle paths in Dublin.
Who can apply for the tax exemption?
The scheme must be operated by an employer. The bicycle can be funded by either the employer or through salary sacrifice of the employee, but it must be purchased by the employer. If employers pay for the bicycle, they can claim it as a tax exempt benefit-in-kind. Where funded by salary sacrifice there will be savings on tax, PRSI and levies. The scheme means an effective saving of at least 47% on the cost of a new bicycle for a top rate taxpayer.
How does it work?
The employee would choose a bicycle and any associated safety equipment (up to a maximum value of €1,000) and the employer would purchase same on behalf of the employee.
How will it be enforced?
It is not envisaged 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.
What equipment is covered?
The list of equipment covered under the scheme is extensive. It includes bicycles, cycle helmets, bells, horns, lights, mirrors, mud guards, reflective clothing panniers, luggage carriers, straps, locks and chains, pumps, puncture repair kits and cycle toolkits.
When does the exemption begin?
The scheme came into operation on the 1st January 2009.
How many employees in a firm can be covered by it?
There is no limit on the amount of employees in a company that can avail of the scheme provided that the employer agrees to participate in the scheme. However, the tax exempt benefit in kind can only be provided to an employee once every five years. |
