Bike to work scheme

Usjes

Hi,

Does anyone know what I have to do to qualify for this scheme ? I tried http://www.bikescheme.ie/ but the website is down so I can't get any useful info. The problem is that I will have to buy a bike very soon (probably tomorrow) but there are no admin staff in the office at this stage. I vaguely remember that the company MUST buy it for you but what exactly does this entail? Could I just pay for it with my own cash and ask them to list my employer on the receipt and then sort it out with my employer later ? Or is there something more specific that I need to do?

Thanks,

Downtime

In most cases the employer must pay for the bike and the employee pays back through their salary so I don't think you could pay for it out of your own cash. Normally a shop will invoice your company.

Beasty

Everything you ever wanted to know, but were afraid to ask, is in the wiki

To be clear on one point - it's the employer that initially buys the bike in all cases (if you have a company credit card, and your company scheme allows it, you could use this to buy the bike)

kingaaa

I sent the paperwork into H.R. 2 days ago, once its processed they pay for the bike and I pay %49 of the initial value over 12 months. Dont ask me how long it will take, I suppose different companies work to different timescales.

Usjes

Beasty wrote: »

Everything you ever wanted to know, but were afraid to ask, is in the wiki

To be clear on one point - it's the employer that initially buys the bike in all cases (if you have a company credit card, and your company scheme allows it, you could use this to buy the bike)

Well this agrees with my own recollection BUT it still doesn't clear up the mystery of what exactly is meant by the 'The employer buying the bike' ,
eg. my employer gives me E500 from petty cash and I walk into the shop and pay for it and give my employer's name on the receipt.
How exactly does this differ from me walking into the shop and paying for it with my own money and then getting reimbursed from petty cash (a case which the scheme rules explicitly forbids)??
I mean how exactly are they going to know who's cash it is, or are they going to check that my employer was physically present in the shop at time of purchase, again not realistic.
So in practical terms what is meant by the employer buys the bike? Or can I just go ahead with my plan to list my employer as the purchaser on the receipt, the only thing I can think of is that the employer has to register with revenue before the purchase but referring to the revenue guidance it explicitly states that the employer doesn't need to notify revenue that it is availing of the scheme. So I'm still baffled as to what 'the employer buys the bike' in the context of a cash transaction.

Beasty

I think you have answered your own question. It's not a mystery at all. The law requires the employer to purchase the bike (company petty cash is fine). If you buy the bike, it doesn't qualify.

Your employer should, of course, keep a record of its purchase, and you should comply with your employer's scheme rules.

If you go ahead with your "scheme" you would then require your employer to "collude" with you. If I was an employer, I would certainly not agree to such a thing.

Usjes

Beasty wrote: »

I think you have answered your own question. It's not a mystery at all. The law requires the employer to purchase the bike (company petty cash is fine). If you buy the bike, it doesn't qualify.

Your employer should, of course, keep a record of its purchase, and you should comply with your employer's scheme rules.

If you go ahead with your "scheme" you would then require your employer to "collude" with you. If I was an employer, I would certainly not agree to such a thing.

Why not Beasty? Can you be specific, and I disagree, there has still been no satisfactory explanation as to what, 'the employer buys the bike', means in the context of a cash transaction. Just to be clear, there is no underhanded monetary gain involved in my plan. I will still pay exactly %49 of the price of the bike and my employer will pay 51% exactly as intended by the official scheme. My plan is merely for the purposes of expediency, I need the bike immediately but there is no employer representative present to be physically involved in the transaction at the moment. So specifically what 'collusion' do you imagine is occurring? What is the difference between me handing over my cash today and me handing over cash from HR on Monday, when it is available ?

bloomfield

I think you need to talk to your local bike shop and ask them how they interpret the rules of the scheme. I know that some only participate in voucher schemes through a 3rd party, or have arrangements where they invoice companies for the price of a bike. In your case, if your company is willing play ball with a less formal arrangement involving petty cash, see if the bike shop is happy, and shop away.

Beasty

Usjes wrote: »

Why not Beasty? Can you be specific, and I disagree, there has still been no satisfactory explanation as to what, 'the employer buys the bike', means in the context of a cash transaction. Just to be clear, there is no underhanded monetary gain involved in my plan. I will still pay exactly %49 of the price of the bike and my employer will pay 51% exactly as intended by the official scheme. My plan is merely for the purposes of expediency, I need the bike immediately but there is no employer representative present to be physically involved in the transaction at the moment. So specifically what 'collusion' do you imagine is occurring? What is the difference between me handing over my cash today and me handing over cash from HR on Monday, when it is available ?

Your employer pays exactly nothing, assuming the salary sacrifice procedure is used. In fact, your employer saves PRSI.

It's the Revenue and ultimately the taxpayer that "pays" the other 51% (using the percentages you quote) and the employers PRSI.

The rules require the employer to purchase the bike. Simple as that. If they do not, the purchase does not qualify. Hence the company's money must be used (hence my reference to petty cash, or company credit card). If you pay and get re-imbursed, the rules are not satisfied, and the bike does not qualify

I am simply explaining the way the legislation works.

Your "plan" requires your employer to collude with you in trying to get around the rules (ie break the law). If I was an employer I would not go along with such a plan.

Hence if you go ahead with your plan, you may find your employer does not go along with it (and you will not be satisfying the legal requirements to qualify for the scheme either way)

bloomfield

To qualify the way the finances of Bike to Work operate a little more, the scheme allows you to purchase a bike (plus certain accessories) up to the value of €1000 once every 5 years, to be deducted from your gross salary - that is, your pay before tax and PRSI and Health Levy and all the rest have come off.

If you are a higher rate tax payer this is equivalent to getting a 51% discount on the price you pay. For someone who doesn't pay higher rate tax the savings are less. The employer must instigate something called 'Salary Sacrifice' where they give you an interest free loan for the amount of the bike, which you would normally repay in installments from the salary most likely for the next year.

The usual operation of the scheme is that you go to your bike shop, obtain a quote for the chosen bike, give that quote to your finance/HR people who then authorise the purchase. You then collect the bike, and the shop gets paid directly or indirectly by your employer. Sometimes your employer will use another company to administer the scheme, in which case you are issued with a voucher to use for the purchase. However, there seems to be no allowance in the rules for an employee to buy a bike using their own money, and then claim that money back from the company.

Lumen

bloomfield wrote: »

The usual operation of the scheme is that you go to your bike shop, obtain a quote for the chosen bike, give that quote to your finance/HR people who then authorise the purchase. You then collect the bike, and the shop gets paid directly or indirectly by your employer. Sometimes your employer will use another company to administer the scheme, in which case you are issued with a voucher to use for the purchase. However, there seems to be no allowance in the rules for an employee to buy a bike using their own money, and then claim that money back from the company.

It is important to separate what's normal from what's legal.

The rules say nothing about quotes, finance/HR approval, vouchers or intermediaries. I see no reason why the Revenue would object to an employee claiming back a purchase on expenses. It is not the most common way for a BIK to be administered, but who cares?

mike12

Hi,
when you give up your salary for the cost of the bike would u have to pay income levy on that amount if not the savings are more like 51% or up to 55% if you are really highly paid.
Mike

Lumen

mike12 wrote: »

when you give up your salary for the cost of the bike would u have to pay income levy on that amount

No. The purchase is handled as a tax-free benefit in kind. Tax-free is means free of all taxes, levies etc. The company is purchasing the bike for you. The salary sacrifice is entirely optional (in the case that the company wants to be compensated). If they want they can just buy you the bike as a bonus.

Taxes and levies only come into play if the purchase is over the €1k limit, in which they apply to the excess.

anoble66

on the bike to work scheme, some shops will allow you to purchase the bike on your own credit card there and then, once they receive the voucher for you from the bike to work company or a bank transfer from your company authorising the purchase they will refund your credit card. Best of both worlds as your getting the bike quickly and still complying with the bike to work scheme rules and saving your 51% or whatever tax rate applies.

Beasty

anoble66 wrote: »

on the bike to work scheme, some shops will allow you to purchase the bike on your own credit card there and then, once they receive the voucher for you from the bike to work company or a bank transfer from your company authorising the purchase they will refund your credit card. Best of both worlds as your getting the bike quickly and still complying with the bike to work scheme rules and saving your 51% or whatever tax rate applies.

To be clear, what the bike shop allows is totally irrelevant. You need to satiisfy the legislation (which requires the employer to purchase the bike) and your employer's scheme rules (it's up to the employer to decide what to do if you don't but I wouldn't want someone turning up on a Monday morning with their bike purchased by the company credit card or company petty cash for HR to turn round and say it's not within their scheme rules).

anoble66

Ok agreed. But what I am referring too below really has little to do with your company - its down to the bike shop. The company will still be purchasing the bike, the paperwork etc will still be completed as a normal bike to work scheme purchase - its just the shop is allowing you to take the bike there and then and charging your *personal credit card* in full - once the bike to work scheme paper work completes, and the bike shop recieve payment from your company etc then they refund you.....to be honest as long as the bike shop is in agreement to this then I cannot see the problem? The company has nothing to do with it, from their point of view its a normal bike to work purchase.

Beasty wrote: »

To be clear, what the bike shop allows is totally irrelevant. You need to satiisfy the legislation (which requires the employer to purchase the bike) and your employer's scheme rules (it's up to the employer to decide what to do if you don't but I wouldn't want someone turning up on a Monday morning with their bike purchased by the company credit card or company petty cash for HR to turn round and say it's not within their scheme rules).