If you are employed or are a director of a company then yes you do.

Look up the website www.TaxFreeBicycles.com for a list of participating bicycle shops. Go to the shop and select the bicycle and or accessories you want and ask for a written quotation. Then return to the website and Sign up as a new user. Once you have registered, simply enter all the details of your quotation, download and print any forms that your employer wants you to complete. Once you have submitted the quotation to the website you simply return the completed employer forms which you just downloaded to your employer.

Once you have completed the forms for your employer we will e-mail you a secure voucher which you should print and return to the bike shop and collect your bicycle and or accessories. Then simply start cycling.

The purpose of the scheme is to encourage more employees to cycle to and from work, or between work places, thereby contributing to lowering carbon emissions, reducing traffic congestion and improving health and fitness levels.

In addition to the purchase of a bicycle the following safety equipment also qualifies:

It is for employers to decide how they will operate the scheme. The simple answer is yes, you can choose whatever brand, make or model of Bicycle or accessories you wish. There are no restrictions.

No. However, the bicycle must be used mainly for qualifying journeys (i.e. travelling to and from work or between places of work).

No. The scheme applies only to new bicycles and cycle safety equipment purchased from approved providers. A list of providers is available on the Tax Free Bicycles website (www.TaxFreeBicycles.com).

Simply go to www.TaxFreeBicycles.com and you will see an option on the home page to “Calculate your savings Here”. There are some examples of savings or you can enter your details of earnings, the value of bicycle you wish to purchase and the approximate savings will appear. To get exact savings you should consult with your employers payroll department, however the calculator on the site should bring you close to the amount.

The exemption applies to expenditure incurred by an employer on or after 01 January 2009.

As the bicycle and/or safety equipment are exempt from tax the employee/director will not be liable to income tax at his or her marginal rate, employee’s PRSI or USC on the cost of the benefit, as reflected in the amount of the salary sacrificed.

The employer benefits in that the employer’s PRSI is not payable on the cost of the bicycle and/or safety equipment.

Note, however, that employers will not be able to reclaim the VAT paid on the bicycle and/or safety equipment.

The bicycle and/or safety equipment must be used by the employee or director mainly for qualifying journeys. This means the whole or part (e.g. between home and train station) of a journey between the employee’s or director’s home and normal place of work or between the normal place of work and another place of work.

Yes. If the bicycle is used for work related journeys, for example trips to the post office or to collect office supplies.

Yes. These schemes are not mutually exclusive.

No. Under the scheme an employer may provide an employee with bicycle and/or cycle safety equipment without the employee being liable for benefit-in-kind taxation limited to a cost of €1,250 for a normal bike and up to €1500 for an electric bike. Where cost exceeds this amount a BIK charge will apply to the balance.

The scheme may be implemented under a salary sacrifice arrangement through the employee’s payroll (in a similar manner to the existing Travel Pass Scheme – see item 6.1 of Employers Guide to PAYE). Under this arrangement the employer provides the bicycle and/or safety equipment to the employee who agrees to forego or sacrifice part of his or her salary every pay period (weekly/fortnightly/monthly) in order to cover the cost of the benefit.

In the specific context of the provision of the bicycle and/or safety equipment Revenue will be prepared to regard salary sacrifice arrangements which meet the following conditions as being effective for tax purposes:

Yes the records in relation to the operation of the scheme and the correct application of the salary sacrifice arrangements can be examined by Revenue officials as part of the normal inspections or audits carried out on payroll operations.

Incorrect application of the provisions of the scheme, either –

will result in the exemption provided by the salary sacrifice arrangements being withdrawn and the full income affected being subjected to tax at the marginal rates, together with employer and employee PRSI and Universal Social Charge.

The full cost must be recovered within a period of twelve months or less.

Employees should settle the full outstanding balance before the date of ceasing employment or retirement.

No. Participation in the scheme is voluntary for employers. However, employers choosing to participate in the scheme must make it generally available to all employees/directors who wish to avail of it.

The tax exempt benefit-in-kind may only be provided to an individual employee once in any period of five consecutive tax years. The tax year in which the bicycle is provided is counted as the first year.

Employees should note that if they avail of the scheme for even a small amount of expenditure relating to the provision of bicycles and/or safety equipment they will not be able to avail of the relief again for five years.

Example: An employee was provided with a bicycle under the scheme in December 2009 and was granted relief in 2009. The five consecutive years would be 2009, 2010, 2011, 2012 and 2013. Therefore, if he or she was provided with a new bike from January 2014, or a later date in that year, they would be entitled to the relief during 2014.

The legislation only allows an individual to make one purchase of a bicycle under the scheme in a 4-year period irrespective of whether the bicycle was used for the full period or not.

Bicycles are normally covered as part of a general household insurance policy or some people may opt to have specific cover for it. If an insurance policy pays out for a bicycle then the stolen one may be replaced but the tax break may only be availed of once in a 4-year period.

The employer must purchase the bicycle and/or cycle equipment. The exemption will not apply where an employee/director purchases a bicycle and/or safety equipment and gets reimbursed by his or her employer.

Delivery charges in respect of the bicycle/safety equipment are also covered by the exemption provided the maximum value of the benefit, including delivery charges, does not exceed €1,250 for a normal bike and up to €1500 for an electric bike. Where the cost exceeds this amount, a benefit-in-kind income tax charge applies on the balance.

No. Bicycle includes pedal cycles or pedelecs but does not include motorcycles, scooters or mopeds.

No. The scheme only applies to the purchase of a whole bicycle or associated safety equipment.

Yes. When purchasing bicycle safety equipment only the rules regarding the availability of the exemption once in any 5-year period and the €1,250 limit on expenditure still apply.

No. Where invoices are provided to an employer purporting to be for bicycles and safety equipment but which relate in fact to other goods and services, the employee and/or the retailer so involved may, in making a false claim or in assisting in the making of a false claim, be liable to a penalty of €3,000.

Yes, the scheme is available to both employees and directors.

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 (e.g. invoices and salary sacrifice agreements between the employer and employee).

In addition, while an employer will not be required to monitor the use of the bicycle and/or safety equipment and there are no penalties in the legislation for the employer in relation to operation of the scheme per se, (payroll and BIK/salary sacrifice aspects of the scheme are, of course, subject to the legislation and regulations concerning the operation of PAYE), the employer will be required to obtain a signed statement from the employee or director that the bicycle is for his or her own use and will be used mainly for travel to and from work or between places of work.

In circumstances where an employee advises the they are not using the bicycle for qualifying journeys any further tax relief due to be granted by way of salary sacrifice should be withdrawn.

Where Revenue become aware that the bicycle was not used by the employee himself/herself or was not used for qualifying journeys the relief granted can be clawed back by way of end of year review.

Purchases within the State – Where the proposed expenditure, inclusive of delivery charges, exceeds €1,250 for a normal bike and up to €1,500 for an electric bike?, the invoice (VAT included) submitted to the employer should be for €1,250 for a normal bike and up to €1500 for an electric bike only. The applicant will be responsible for arranging payment of any balance directly to the supplier.

Example:
Cost of equipment = €2,000 incl. VAT + €50 delivery charge = Total €2,050.
Invoice from supplier to employer = €1,500.

The employer, providing the application is otherwise in order, will approve the application, pay the supplier €1,500 as per invoice and arrange salary sacrifice for €1,500 over 12-month period.

Applicant is invoiced separately by supplier for balance of €550.

Purchases within the State – Where the proposed expenditure, inclusive of delivery charges, exceeds €1000, the invoice (VAT included) submitted to the employer should be for €1000 only. The applicant will be responsible for arranging payment of any balance directly to the supplier.

Example

Cost of equipment = €1,500 incl. VAT + €50 delivery charge = Total €1,550.

Invoice from supplier to employer = €1,000.

The employer, providing the application is otherwise in order, will approve the application, pay the supplier €1,000 as per invoice and arrange salary sacrifice for €1,000 over 12-month period.

Applicant is invoiced separately by supplier for balance of €550.

Further information is available by contacting TaxFreeBicycles.com by phone or e-mail

Telephone: 01-4263607 or 086-1015809

By email: Laurence.roche@taxfreebicycles.com