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

CramCycle

Kaisr Sose wrote: »

I felt somebody might post that.

According to Revenue an employee can only avail of the scheme once every 5yrs. (It does not mention separate employments in a 5yr period but one would assume the 5yr rule covers multiple employments.

To do otherwise possibly involves a tax offence

I informed my employers (two) and the tax office had no opinion on it, other than there opinion could not be taken as a legal interpretation.

I am not overly worried if revenue ask me to pay the difference, as it was the payment plan that was of most benefit

Kaisr Sose

CramCycle wrote: »

I informed my employers (two) and the tax office had no opinion on it, other than there opinion could not be taken as a legal interpretation.

I am not overly worried if revenue ask me to pay the difference, as it was the payment plan that was of most benefit

It does not surprise me that Revenue were unable or unwilling to clarify. They give lousy tax advise. They could have referred to their own briefing on it where it mentions once.

As with all tax matters it is the Finance Act and SI that will determine what is permitted.

CiniO

ar_Vis wrote: »

Correct me if I am wrong, but if u are getting
9.5e an hour, that works out
370.5e a week so that leaves u with
336e after tax prsi etc
and if u buy a bike agree to deduct
20e of ur wages every week, that would leave u with
350.5e before tax etc and
336e after
So it would work out as free bike or I do not get this scheme at all
Thanks
To add its single person payed by week

Yes, that would be correct. Effectively you get your bike for free.

It can be even better.
Imagine you earn 372 per week (f.e. 40 hours by €9.30)
If you buy a bike for €1000 and spread the payments over 50 weeks by €20 each week, this brings your weekly gross salary down from €372 to €352.
So weekly savings are the following:
You save €14.88 on PRSI, as for weekly salary at €352 PRSI is 0. For €372 it's 4% so €14.88.
You save USC at 7% rate on €20 so it's €20 x 7% = €1.4
And you save PAYE income tax at 20% of €20 = €4.
Your total weekly savings are €14.88 + €1.4 + €4 = €20.28
So while your gross salary was reduced by €20 a week as you pay off your bike, your net salary is €0.28 per week. Over 50 weeks this gives you €14 euro savings.
So effectively, you not only get your bike for free, but you end up with extra €14 quid by the end of the year.

However I think such cases would be rare, as most employers are not that stupid to pay people such rate just for the reason that if you exceed €352 per week, you start paying PRSI at 4% on all your income for that week.

F.e. if your pay rate would be €9 per hour at 39 hours a week, you would get €351 gross.
If your employer decided to increase your pay by 5 cents per hour making it €9.05 per hour, your gross weekly salary would jump to €352.95 and from now on you would have to pay PRSI at 4% from all that which would equal to €14.12.
So effectively, your weekly pay would increase by €1.95 (from 351 to 352.95) but you take home pay would go down by €14.12 - €1.95 = €12.17

So it's not really a feature of bike to work scheme, but just the way PRSi works.

However it's a great idea to exploit this if someone is on rate you mentioned.

Even if you are on different rate, it's always beneficial to spread bicycle payments to reduce your gross weekly pay to €352 as that way there are savings on PRSI.
So f.e. even someone getting €600 a week, can do that. Spread bike payments over 4 week (€250 each week) and this will bring down gross weekly salary from €600 to €350 giving savings on PRSI. In that case savings would be €56.32.

CramCycle

Kaisr Sose wrote: »

.

As with all tax matters it is the Finance Act and SI that will determine what is permitted.

My reading was per employment, sdifference suppose we would have to wait for a ruling against someone but without clarity, I imagine all you could be charged is the difference plus a penalty.

cython

CramCycle wrote: »

My reading was per employment, sdifference suppose we would have to wait for a ruling against someone but without clarity, I imagine all you could be charged is the difference plus a penalty.

The Taxes Consolidation Act (where the scheme is basically implemented in law) states the following:

(c) A director or employee shall not, by virtue of this subsection, be relieved from a charge to income tax under subsection (1) more than once in any period of 5 consecutive years of assessment, commencing with the year of assessment in which the director or employee concerned is first provided with a bicycle or bicycle safety equipment.

My reading of that would be that it's once every 5 years irrespective of changes of employment. It states employee or director as they are the 2 groups of people entitled to avail of the scheme, but even if you change jobs you are still an employee or director, albeit of a different company, (or you become ineligible in any case), so the 5 year exclusion would logically remain.

Kaisr Sose

I would also concur that it's once every 5 yrs (no of employments does not alter the 5 yr period). I am surprised Beasty has not added his view..

CramCycle

Kaisr Sose wrote: »

I would also concur that it's once every 5 yrs (no of employments does not alter the 5 yr period). I am surprised Beasty has not added his view..

There was quite a large discussion on this nearer the beginning, I think Beasty had weighed in but I must look back to see what my reasoning was as it does not seem as robust.

m5ex9oqjawdg2i

Does the employer need to provide facilities such as secure area to lock your bike and showers?

iwillhtfu

Hudson Mealy Fossil wrote: »

Does the employer need to provide facilities such as secure area to lock your bike and showers?

Of course they do. They should provide a masseuse aswell or I'd be handing in my notice. :eek:

yabadabado

Hudson Mealy Fossil wrote: »

Does the employer need to provide facilities such as secure area to lock your bike and showers?

No.Why would they?

m5ex9oqjawdg2i

iwillhtfu wrote: »

Of course they do. They should provide a masseuse aswell or I'd be handing in my notice. :eek:

Simple yes or no would do. No need for the asumptions.

yabadabado wrote: »

No.Why would they?

Just wondering if it's required. I don't think a lot of people know the answer, me included, and I would like to educate myself. My company provides a decent lockup and a savage shower room. People have complained about both from day one. The lockup area is better than most I would imagine, but not immune to theft. Some people even complained that the door was too heavy, not realising how fantastic that actually is :P.

Kaisr Sose

Hudson Mealy Fossil wrote: »

Simple yes or no would do. No need for the asumptions.



Just wondering if it's required. I don't think a lot of people know the answer, me included, and I would like to educate myself. My company provides a decent lockup and a savage shower room. People have complained about both from day one. The lockup area is better than most I would imagine, but not immune to theft. Some people even complained that the door was too heavy, not realising how fantastic that actually is :P.

Put simply. No they don't. They don't have to provide lock up either and they don't have to provide a lock or safety equipment. They are not liable if the bike is stolen or damaged, it's your bike.

It would be nice if Govt could legislate for all those to be provided but most companies have enough on their hands complying with other legal obligations without having these additions thrown in. Also, our elected representatives did not do such a good job on some recent high profile legislation thrust upon us to entrust them with regulating what shorts, jersey, tyre, or bike we can use to cycle to work. (God no!)

If they got away with that next they would have mandatory National Cycle Test (NCT) for road worthiness etc.

Don't be giving them ideas before an general election..:-)...

cython

Kaisr Sose wrote: »

Put simply. No they don't. They don't have to provide lock up either and they don't have to provide a lock or safety equipment. They are not liable if the bike is stolen or damaged, it's your bike.

It would be nice if Govt could legislate for all those to be provided but most companies have enough on their hands complying with other legal obligations without having these additions thrown in. Also, our elected representatives did not do such a good job on some recent high profile legislation thrust upon us to entrust them with regulating what shorts, jersey, tyre, or bike we can use to cycle to work. (God no!)

If they got away with that next they would have mandatory National Cycle Test (NCT) for road worthiness etc.

Don't be giving them ideas before an general election..:-)...

I'd personally much prefer to see them incentivised in some manner, like the cycle to work scheme itself. If you make it a requirement for companies providing the scheme, they probably just won't offer the scheme. However, if there is another fringe benefit associated with providing the facilities many will do it if they can. Carrot vs stick ultimately, but the stick might beat people away from other things rather than into doing the desired.

iwillhtfu

Hudson Mealy Fossil wrote: »

Simple yes or no would do. No need for the asumptions.

To be fair they don't even have to facilitate the bike to work scheme afaik so changing facilities and lock ups would probably be a stretch.

I do agree though that city centre offices should provide these facilities as it would be an incentive for people to leave the car at home.

rubadub

Hudson Mealy Fossil wrote: »

Does the employer need to provide facilities such as secure area to lock your bike and showers?

If they did it would probably be the main topic of discussion in this thread.

-how people are going mad as their employer refuses to take part due to huge cost of having to provide showers. Especially in the likes of a company like this

RainyDay

Kaisr Sose wrote: »

Put simply. No they don't. They don't have to provide lock up either and they don't have to provide a lock or safety equipment. They are not liable if the bike is stolen or damaged, it's your bike.

It would be nice if Govt could legislate for all those to be provided but most companies have enough on their hands complying with other legal obligations without having these additions thrown in.

Some local authorities mandate bike locking areas and showers as part of planning permission for new offices or businesses. This is a good approach.

jon1981

RainyDay wrote: »

Some local authorities mandate bike locking areas and showers as part of planning permission for new offices or businesses. This is a good approach.

Makes sense if you want to encourage cycling to work and uptake of the scheme. These go hand in hand together.

Kaisr Sose

RainyDay wrote: »

Some local authorities mandate bike locking areas and showers as part of planning permission for new offices or businesses. This is a good approach.

That's good, but unfortunately, it ain't got anything to do with the B2W scheme. It would also be unfair (under the B2W) to put the same statutory requirement to provide showers on a company employing one or two people as one that employed 1000. Knowing Ireland, the provision of one shower would be substantial compliance but quite useless if 100 people wanted to use it at 8.45am!

My employer provides showers, but not because they have to. I could see lots of employers baulking at B2W if that was a requirement. As it is, participation is voluntary. Employers don't have to provide car parking for those with cars so why lock up facilities for bikes or showers for staff? Good for cyclists but what is in it for them?

RainyDay

Kaisr Sose wrote: »

That's good, but unfortunately, it ain't got anything to do with the B2W scheme. It would also be unfair (under the B2W) to put the same statutory requirement to provide showers on a company employing one or two people as one that employed 1000. Knowing Ireland, the provision of one shower would be substantial compliance but quite useless if 100 people want

The folks who write the statutory provisions are pretty good at taking size into account. It's not a new concept for them.

Kaisr Sose wrote: »

My employer provides showers, but not because they have to. I could see lots of employers baulking at B2W if that was a requirement. As it is, participation is voluntary. Employers don't have to provide car parking for those with cars so why lock up facilities for bikes or showers for staff? Good for cyclists but what is in it for them?

What's in it for the employer? On a cost-per-employee basis, it is probably cheaper to provide a shower or two and a few lockers than to pay for land for parking spaces. Their employees will be fitter, have less sick leave, lower pension costs and will be more awake and alert when they get to their desk. What's not to like?

martyc5674

How much does the bike shop actually get of the 1000 when a voucher scheme is used( I scanned the thread didn't find it)
Cheers
Marty.

CramCycle

martyc5674 wrote: »

How much does the bike shop actually get of the 1000 when a voucher scheme is used( I scanned the thread didn't find it)
Cheers
Marty.

It depends on the voucher scheme company but my understanding is they only get 90% of it, which is why it's harder to get a discount if you use a voucher as a huge chunk of their profit, normally the chunk that they would give you if you negotiate, is already gone.

So for 1000 euro voucher, typically they will get 900euro

martyc5674

Thanks cramcycle thats roughly my understanding of it aswell.
The guy who looks after this at a friends workplace is saying that the bike shop is trying to avoid tax by offering a better price on a bike should the company do a money transfer rather than one of the voucher schemes...when in reality my thinking is that he just wants to have less work to do so is opting for using one of these schemes.
Marty.

CramCycle

martyc5674 wrote: »

Thanks cramcycle thats roughly my understanding of it aswell.
The guy who looks after this at a friends workplace is saying that the bike shop is trying to avoid tax by offering a better price on a bike should the company do a money transfer rather than one of the voucher schemes...when in reality my thinking is that he just wants to have less work to do so is opting for using one of these schemes.
Marty.

Bike shops dislike the schemes because of the hit but they accept them as they are alot of customers who may turn into repeat customers as well as giving them more turnover with suppliers which is better for them as well.

They are not avoiding tax as they still have to provide a receipt.

The friends workplace is just trying to take the perceived easier path for them (although administering the scheme themselves is incredibly easy and may in fact be as easy as getting involved with one of these voucher companies).

So your view is dead on I suspect.

TychoCaine

Using a 3rd party provider to run the scheme isn't just a lazy way out for your employer. If an employer does it directly they have to pay out the full cost of the bike to the shop up front and only get that back bit by bit over the year. That can cause cash flow issues for some companies if every employee hits them at once. A provider can spread the cost over the year, only taking money off the company as the employees pay it back. That kind of finance doesn't come for free if you go to your bank. 10% margin is still a bit saucy, but 1/2 of it gets eaten up with finance costs.

Beasty

TychoCaine wrote: »

Using a 3rd party provider to run the scheme isn't just a lazy way out for your employer. If an employer does it directly they have to pay out the full cost of the bike to the shop up front and only get that back bit by bit over the year. That can cause cash flow issues for some companies if every employee hits them at once. A provider can spread the cost over the year, only taking money off the company as the employees pay it back. That kind of finance doesn't come for free if you go to your bank. 10% margin is still a bit saucy, but 1/2 of it gets eaten up with finance costs.

The employer is not required to offer the employee credit (although most do). It's entirely up to them - they could seek the salary sacrifice in one go. Obviously that moves the "financing" onto the employee, but they still get a tax free bike (through a 1 off rather than 12 monthly payments)

donutheadhomer

Could one possibly buy a bike for a child on this scheme - i.e. does the bike need to be an adult bike. I know it is a Cycle to Work scheme but I work from home and can't use the scheme but my kid could cycle to school.

micar

donutheadhomer wrote: »

Could one possibly buy a bike for a child on this scheme - i.e. does the bike need to be an adult bike. I know it is a Cycle to Work scheme but I work from home and can't use the scheme but my kid could cycle to school.

In essence....yes. you buy kids bikes but the invoice from the shop will have say that an adult bike was bought for the same price.

I've heard stories of people buying gardening equipment like lawn mowers on the scheme. The invoice just says a bike was bought.

Eamonnator

micar wrote: »

In essence....yes. you buy kids bikes but the invoice from the shop will have say that an adult bike was bought for the same price.

I've heard stories of people buying gardening equipment like lawn mowers on the scheme. The invoice just says a bike was bought.

It is against the law to do either of these.

Eamonnator

donutheadhomer wrote: »

Could one possibly buy a bike for a child on this scheme - i.e. does the bike need to be an adult bike. I know it is a Cycle to Work scheme but I work from home and can't use the scheme but my kid could cycle to school.

No. It is a cycle to work scheme. It's not a cycle to school scheme(unless you're a teacher)

awec

micar wrote: »

In essence....yes. you buy kids bikes but the invoice from the shop will have say that an adult bike was bought for the same price.

I've heard stories of people buying gardening equipment like lawn mowers on the scheme. The invoice just says a bike was bought.

Why would any shop take this risk? I don't believe this to be true.