Bike to Work scheme - the Megathread - Read post #1 before posting

cython

hesker wrote: »

I see on the Revenue website purchase of second-hand bikes under bike to work seems to be excluded

http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/faqs/cycle-work.html#cycle25



When did this come into effect? I don't recall seeing this restriction when the scheme was set up. I still have the guidance document from 2008 that does not mention this requirement. I also retained the relevant section from Section 118(5G) TCA 1997, last updated Jan 2009. No mention of new bikes here either.
Was there an update to the legislation that introduced this restriction?

As far as I recall this was always the case, and while I can't find it on irishstatutebook.ie, CAI have Section 118B regarding Revenue approved salary sacrifices, which should be a pretty reliable source under the circumstances. The linked page contains the following two provisions:

(2)(a) The amount of the remuneration forgone under any salary sacrifice arrangement specifically approved by the Revenue Commissioners in relation to—
(i) travel passes issued by an approved transport provider under section 118(5A),
(ii) shares appropriated to employees and directors under an approved profit sharing scheme within the meaning of Chapter 1 of Part 17, which are exempt from a charge to tax by virtue of section 510(4), and
(iii) a bicycle or bicycle safety equipment provided to a director or employee and which is exempt from a charge to tax by virtue of section 118(5G),
shall be exempt from tax.

and then they oddly have a differing wording of Section 118(5G) to what you describe:

Subject to paragraph (c) of this subsection, subsection (1) shall not apply to expense of up to €1,000 incurred by the body corporate in, or in connection with, the provision for a director or employee of a bicycle or bicycle safety equipment, where—
(i) the bicycle and bicycle safety equipment provided is unused and not second-hand,
(ii) the director or employee uses the bicycle or bicycle safety equipment, or the bicycle and the bicycle safety equipment, as the case may be, mainly for qualifying journeys, and
(iii) bicycles or bicycle safety equipment, or bicycles and bicycle safety equipment, as the case may be, are made available generally to directors and employees of the body corporate.

RainyDay

hesker wrote: »

I see on the Revenue website purchase of second-hand bikes under bike to work seems to be excluded

http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/faqs/cycle-work.html#cycle25



When did this come into effect? I don't recall seeing this restriction when the scheme was set up. I still have the guidance document from 2008 that does not mention this requirement. I also retained the relevant section from Section 118(5G) TCA 1997, last updated Jan 2009. No mention of new bikes here either.
Was there an update to the legislation that introduced this restriction?

That's definitely a change - Rothar were providing reconditioned bikes under BTW scheme

hesker

It's not clear if it was a change or if it was always this way. The fact that a supplier was willing to sell you a bike second-hand does not mean it was compliant with the legislation.

Thanks cython for that link.

If you look at

http://www.charteredaccountants.ie/taxsource/1997/en/act/pub/0039/sec0118.html#icai-1997-en-act-pub-0039-sec0118-FA08No2-7-1

or look at the option to show "change history" on the left hand side, it does appear like there is a change here but I'm not able to figure out how the change history works on that site.

The footnote says

Inserted by F(No.2)A08 s7(1)(a). Applies in respect of expense incurred on or after 1 January 2009.

cython

hesker wrote: »

It's not clear if it was a change or if it was always this way. The fact that a supplier was willing to sell you a bike second-hand does not mean it was compliant with the legislation.

Thanks cython for that link.

If you look at

http://www.charteredaccountants.ie/taxsource/1997/en/act/pub/0039/sec0118.html#icai-1997-en-act-pub-0039-sec0118-FA08No2-7-1

or look at the option to show "change history" on the left hand side, it does appear like there is a change here but I'm not able to figure out how the change history works on that site.

The footnote says

Inserted by F(No.2)A08 s7(1)(a). Applies in respect of expense incurred on or after 1 January 2009.

My reading of the history is that the entire section was added by the Finance Act of 2008 (FA08), though perhaps a second revision (hence No. 2), and then applies to expenses in 2009, as you said. This would align with the introduction of the scheme, which to me indicates only new bikes were ever supposed to be supplied under it.

Beasty

The scheme has only been in place since 2009 and the requirement for it to be new and unused bikes has always been there

ruskin

Ok, so I got my employer last Friday to register with biketowork.ie. On Saturday I looked at a bike and got my invoice from them. Im going to give my employer the invoice tomorrow, anyone know how long before I can actually get the bike?
I can't wait here! lol

fabvinny

ruskin wrote: »

Ok, so I got my employer last Friday to register with biketowork.ie. On Saturday I looked at a bike and got my invoice from them. Im going to give my employer the invoice tomorrow, anyone know how long before I can actually get the bike?
I can't wait here! lol

it took about 2 weeks for me from the time i handed in the invoice to collecting the bike.

xebec

ruskin wrote: »

Ok, so I got my employer last Friday to register with biketowork.ie. On Saturday I looked at a bike and got my invoice from them. Im going to give my employer the invoice tomorrow, anyone know how long before I can actually get the bike?
I can't wait here! lol

From giving my employer the invoice to getting the bike for me was 24 hours (paid straight away by company CC and bike in stock). How long it'll take you? It depends on how the processing is done by your employer and whether the bike will have to be ordered in by the shop.

dceire

Beasty wrote: »

The one situation where Irish VAT is not paid is where the employer is not registered for Irish VAT (not normally the case, but possible, particularly for low turnover or financial service companies). In this case the retailer charges UK VAT at 20%, but there is no mechanism for the employer to charge itself Irish VAT. Hence the VAT cost is 20% in this case.

Quick question for Beasty. You literally seem to be the best source for information on the scheme that I have found, online or otherwise, however, do you know of an official source for the above? I trust 100% that this is true but I know my boss will be looking for it in writing somewhere official; I'm not sure boards is going to cut it with her, she can be a bit anal about these things. I called revenue and they just didn't seem to grasp what the situation was and suggested that 'you probably just pay VAT in whatever country you buy it from' :mad: They don't seem to have a clue.

I plan on buying online from Canyon in Germany

Beasty

dceire wrote: »

Quick question for Beasty. You literally seem to be the best source for information on the scheme that I have found, online or otherwise, however, do you know of an official source for the above? I trust 100% that this is true but I know my boss will be looking for it in writing somewhere official; I'm not sure boards is going to cut it with her, she can be a bit anal about these things. I called revenue and they just didn't seem to grasp what the situation was and suggested that 'you probably just pay VAT in whatever country you buy it from' :mad: They don't seem to have a clue.

I plan on buying online from Canyon in Germany

The VAT treatment is based on general VAT rules which are in turn based on EU law, and in particular the "distance selling rules". It's not something specific to the BTW scheme which is why you would be unlikely to see anything "official" in connection with the BTW rules.

However perhaps one way to help explain the specific point here (rather than the general application of VAT in BTW rrangements where an employer would normally be within the scope of VAT) is as follows

If the employer is not subject to VAT why should this be different from any other purchase made by that employer? It cannot reclaim any VAT (and similarly does not apply VAT to its sales)

In this case the purchase is from an overseas, EU based, supplier. Cross border sales within the EU must follow the normal VAT rules, with the rate applicable in the country in which the seller is registered applied. That is unless the purchaser can provide evidence (via its VAT registration details) that it is registered for VAT - in this case the purchaser is not registered and therefore cannot provide such evidence and hence the price paid includes the irrecoverable VAT applied by the overseas retailer

Skip111

Does anyone know if paid interns and not 'employees' are allowed to avail of this?

Thanks!

CramCycle

Skip111 wrote: »

Does anyone know if paid interns and not 'employees' are allowed to avail of this?

Thanks!

If they are paid by the company, it is at the discretion of the company as I presume a paid intern is on a set contract. If you are talking about Jobsbridge, then no. I presume though that if they did let you, then they would presumably take it all at once from a paycheck as you won't be around long enough to spread out the payments.

browne_rob5

Hi all

I want to buy a bike through the scheme and I'm looking for some advice on what bike I should buy. I've never bought a decent bike before so not sure where to start. I will be cycling 4k each way to work on flat ground. Would also like to be able to use the bike at weekends for a longer cycle. Recommendations for a good shop in Dublin would also be appreciated. Willing to spend up to the €1k.

Thanks all!

CiniO

I looked through different FAQs and the thread here, but couldn't really find the answer in relation to PRSI.

Assume person earning €600 per week. That's total of €31,200 per year. Taxes paid at 20%, as income is below higher 41% band treshold.

Income tax and USC is pretty clear. Assume purchasing a bike of €1000 value.

So savings for employee are
20% of €1000 = €200 - savings on income tax.
7% of €1000 = €70 - savings on USC.
And as PRSI is paid at 4%, then savings on PRSI are:
4% of €1000 = €40.

Total of €310.

However, PRSI is paid at 4% rate when weekly income is more than €352 per week. So someone earning €352 or less per week, doesn't pay PRSI at all.

Now - if you distribute your bike repayments over 4 weeks, by salary sacrifice of €250 per week.
Then for those 4 weeks, you gross taxable income is €600 - €250 = €350, which is below PRSI treshold.
Does that mean that PRSI is not paid then at all for those 4 weeks, giving extra savings?
That would account for 4% savings on €350 per week for 4 weeks, so 4% on €1400 in total = €56.

Am I right in thinking then, if you distribute bike repayments over 4 weeks in that particular case, there will be extra €56 savings, giving total savings on bike of €366, effectively paying €634 for a bike in total?

krissovo

If you have not paid tax in Ireland for a couple of years due to working abroad does the benefits still work out? My finance department seam to think that I need to be tax payer for 6 months to be able to get biggest benefit.

CramCycle

CiniO wrote: »

I looked through different FAQs and the thread here, but couldn't really find the answer in relation to PRSI.

Assume person earning €600 per week. That's total of €31,200 per year. Taxes paid at 20%, as income is below higher 41% band treshold.

Income tax and USC is pretty clear. Assume purchasing a bike of €1000 value.

So savings for employee are
20% of €1000 = €200 - savings on income tax.
7% of €1000 = €70 - savings on USC.
And as PRSI is paid at 4%, then savings on PRSI are:
4% of €1000 = €40.

Total of €310.

However, PRSI is paid at 4% rate when weekly income is more than €352 per week. So someone earning €352 or less per week, doesn't pay PRSI at all.

Now - if you distribute your bike repayments over 4 weeks, by salary sacrifice of €250 per week.
Then for those 4 weeks, you gross taxable income is €600 - €250 = €350, which is below PRSI treshold.
Does that mean that PRSI is not paid then at all for those 4 weeks, giving extra savings?
That would account for 4% savings on €350 per week for 4 weeks, so 4% on €1400 in total = €56.

Am I right in thinking then, if you distribute bike repayments over 4 weeks in that particular case, there will be extra €56 savings, giving total savings on bike of €366, effectively paying €634 for a bike in total?

Its possible that it will appear that way over the 4 weeks but your tax credits etc. are averaged out over the year and corrected/adjusted with your P21 so there is no extra saving to be made this way, it might look like there is but it doesn't work out at the end of the year.

krissovo wrote: »

If you have not paid tax in Ireland for a couple of years due to working abroad does the benefits still work out? My finance department seam to think that I need to be tax payer for 6 months to be able to get biggest benefit.

To get the biggest benefit (money saving wise) you need to go into the higher tax band in the tax year that you are having payments made, ie maybe they mean that you will not go into the higher tax bracket before the end of the year due to not working in the country for a few months of it. If you spread the payments over the 12 months, you would get the benefits on the portion of payments in the year that you do hit the higher tax bracket.

This said, the sooner you get the bike, the better for you as you will have a new bike sooner

CiniO

CramCycle wrote: »

Its possible that it will appear that way over the 4 weeks but your tax credits etc. are averaged out over the year and corrected/adjusted with your P21 so there is no extra saving to be made this way, it might look like there is but it doesn't work out at the end of the year.

Tax credit balance out by the end of the year with P21, but PRSI afair doesn't.
PRSI is calculate on weekly basis (if wages are paid weekly) and therefore for weeks where total gross taxable income is no more than €352, PRSI charge is 0.
That's a fact, and I'm fairly sure about that.
Only what I don't really know, if this works out with bike to work scheme like that. Logically thinking it should, but maybe just there is something which I don't know, therefore I ask here.

BoardsMember

Non "technical" question.

Do people struggle with the trade-off between second hand = cheaper but better value for money; versus new = qualifies for the scheme. If getting into cycling for first time there might be an argument for going cheaper first on second hand, and saving the scheme for the trade up.

krissovo

Hey thanks CramCycle, look like I will have to wait until I get a shiny new bike

CramCycle

CiniO wrote: »

Tax credit balance out by the end of the year with P21, but PRSI afair doesn't.
PRSI is calculate on weekly basis (if wages are paid weekly) and therefore for weeks where total gross taxable income is no more than €352, PRSI charge is 0.
That's a fact, and I'm fairly sure about that.
Only what I don't really know, if this works out with bike to work scheme like that. Logically thinking it should, but maybe just there is something which I don't know, therefore I ask here.

You could in fact be right, PRSI is sorted by the DSP so I thought when they said pay period they meant per tax year but they easily could have meant per payslip or per employment. I will admit I am not sure and you could be right.

BoardsMember wrote: »

Non "technical" question.

Do people struggle with the trade-off between second hand = cheaper but better value for money; versus new = qualifies for the scheme. If getting into cycling for first time there might be an argument for going cheaper first on second hand, and saving the scheme for the trade up.

I know from a part timer here that the scheme offered no money saving but the ability to pay off every month like a no questions asked, interest free loan was a huge bonus as she could not afford the bike new or second hand in one lump sum payment. Suppose it depends on your situation as to wether its worthwhile to wait or not.

RainyDay

route66 wrote: »

+1

I was in exactly the same situation and checked it with the Tax Office. They confirmed that the various references to 5 years are "Tax Years". I.E. You could have bought a bike on the 31st December 2009 and buy again on the 1st January 2014.

nerraw1111 wrote: »

Yes. You can get a bike now. No need to wait until July. I've seen some bike shops tweet about it.

kendragon wrote: »

Quick question, apologies if this was answered before... 44 pages is too many to go through. I didn't see it specifically answered in the front page or on any of the, many, tax free bike websites I've checked. Thanks.

I purchased a bike in July of 2009 through the scheme. Its now five years later but I had assumed that I would have to wait till July of this year to purchase a new bike through the scheme. A friend of mine says that I can get it now because its within the tax year. Anyone know if that is true? Can I use the scheme again now or do I have to wait till after July?

Folks - is there any definition in the rules about which is the key date for deciding the year? I applied for the scheme in work and ordered the bike in late 2009. The bike was delivered and the first payment was deducted in early 2010. So am I a 2009 person who can reapply now, or a 2010 person?

Inquitus

RainyDay wrote: »

Folks - is there any definition in the rules about which is the key date for deciding the year? I applied for the scheme in work and ordered the bike in late 2009. The bike was delivered and the first payment was deducted in early 2010. So am I a 2009 person who can reapply now, or a 2010 person?

I think Beasty answered this previously, you can avail of the scheme from Jan 1st of the start of the 5th year since you last availed of it.

dogsears

If what you're asking is what date are you first treated as having availed of the scheme, then, as the scheme in essence is an exemption from being taxed on a BIK, it would be the date of the BIK i.e. the date your employer incurred the expense. Whether that was 2009 or 2010 is a matter of fact but it sounds like 2010 if that's when they started taking payments off you.

RainyDay

dogsears wrote: »

If what you're asking is what date are you first treated as having availed of the scheme, then, as the scheme in essence is an exemption from being taxed on a BIK, it would be the date of the BIK i.e. the date your employer incurred the expense. Whether that was 2009 or 2010 is a matter of fact but it sounds like 2010 if that's when they started taking payments off you.

Thanks, that's what I was afraid of. Can anyone tell me if my slightly squeaky bottom bracket will last until next January?

Ryath

RainyDay wrote: »

Thanks, that's what I was afraid of. Can anyone tell me if my slightly squeaky bottom bracket will last until next January?

We're all for advocating a new bike as being the answer to all of life's problems around here but a new bottom bracket will cost less than €30 fitted.

RainyDay

Ryath wrote: »

We're all for advocating a new bike as being the answer to all of life's problems around here but a new bottom bracket will cost less than €30 fitted.

Think Bike in Rathmines quoted me €50, and I've always been fairly happy with their work in the past. Is this price really steep? They also want to change the change and cassette again, which I think was another €50, on a bike that probably wouldn't get me €150 if I put it up for sale.

CramCycle

RainyDay wrote: »

Think Bike in Rathmines quoted me €50, and I've always been fairly happy with their work in the past. Is this price really steep? They also want to change the change and cassette again, which I think was another €50, on a bike that probably wouldn't get me €150 if I put it up for sale.

It depends on the BB and if there is any other damage, rust, seizing but yes, 50 sounds steep, for a basic, bargain basement, nothing fancy BB, I would have expected about 30/35euro.

RainyDay

CramCycle wrote: »

It depends on the BB and if there is any other damage, rust, seizing but yes, 50 sounds steep, for a basic, bargain basement, nothing fancy BB, I would have expected about 30/35euro.

Cheers, I'll do a bit more shopping around so.

CramCycle

RainyDay wrote: »

Cheers, I'll do a bit more shopping around so.

There could be other reasons for it though, that may make the job tougher than expected, its also been awhile since I paid for this to be done so the price may have jumped as well.

dogsears

CiniO wrote: »

Tax credit balance out by the end of the year with P21, but PRSI afair doesn't.
PRSI is calculate on weekly basis (if wages are paid weekly) and therefore for weeks where total gross taxable income is no more than €352, PRSI charge is 0.
That's a fact, and I'm fairly sure about that.
Only what I don't really know, if this works out with bike to work scheme like that. Logically thinking it should, but maybe just there is something which I don't know, therefore I ask here.

Just in case anyone's still interested, the above is correct. At least, I checked it with a colleague who's a PRSI expert and she said its correct. The salary sacrifice used to pay for the bike is recognised in working out if you're over the €352 per week or not and the calculations aren't cumulative over the year so the additional €56 savings on buying a bike under the BTW scheme as set out in the initial post on this should hold.