Cycle to Work Scheme / BIK?

PhilipDonne

BIK Question on Cycle to Work Scheme: -

Am on a salary at higher rate of tax 41%

Company has offered to offer employees the bike to work scheme. No mention of limits, but have been advised that "amounts over €1,000 will be subject to income tax and PRSI at your relevant marginal rate i.e. at the top tax rate that you pay."

Understand that tax / PRSI / levies relief is available up to €1000, savings of 51%
(41% tax / 8% PRSI / 2% levy)
Meaning I pay €490 over 12 months.

>>>>>>>
Just wondering implications ifI go for a bike in excess of the €1000?

From what I can find, am I correct in reading it that i will be charged tax / pensions / levies on it?

so if i get a bike for €1,500
I will pay €490 / 12 each month for the first €1000

Then theres the B.I.K. of €500 on which I pay 51% = €255 in taxes/levies
But its still a saving of €245 for the employee tho, if the company agrees to bikes >€1000

Or am I reading something wrong?

Thanks in advance

Zamboni

If you are ultimately buying the bicycle why does BIK come into it?

As you said the scheme only operates up to €1000.

Anything after that would be a normal deduction from your payslip.

PhilipDonne

If you check this site: -

http://www.revenue.ie/en/practitioner/law/bik-exemption-for-bicycles.pdf

taxfree BIK is on First €1000
taxable BIK is on excess?

Just not sure on the implications for employee

Zamboni

Who is buying the bicycle?

If the company are buying the bike you will be charged BIK only on the excess of the €1,000

If you are buying the bike you BIK is not applicable at all.

PhilipDonne

The company is buying the bike, but have stated no limit to purchase price.

So ill be charged 51% on the excess, still saving 49% of the excess.

Beasty

The company must buy the bike, otherwise the scheme does not work

Presumably they are putting in place the salary sacrifice for the first €1,000. You presumably re-imburse them for the excess of purchase price over €1,000 (in which case there is no BIK). You are in effect paying the full cost of the bike, but getting tax relief on the first €1,000.

If the company is buying the bike for you, with no salary sacrifice, the first €1,000 should be tax free with the excess subject to normal BIK rules. In this case the company, and not you, pay the full cost of the bike, and you pay tax on the price in excess of €1,000.

To date, I am not aware of employers going down the second option, but there is nothing to stop them doing this if they are prepared to fund the cost of the bike rather than pass it on to the employee

Beasty

PhilipDonne wrote: »

The company is buying the bike, but have stated no limit to purchase price.

So ill be charged 51% on the excess, still saving 49% of the excess.

... assuming the company is funding the full cost of the bike. I would be surprised if this is the case, as it costs them money (what's to stop you getting a bike for €5k for example, if the company is ultimately paying for it?)

PhilipDonne

Thanks for all the replies.

Just thought I could get the dearer bike, as the co has no limits on the purchase price.
Savings on 1st 1000 then a nice notional income of the excess.

I would then get the BIK of the excess & get charged tax/PRSI on it.

Will talk to HR n see.

Have a good weekend

P