Employer FAQs

Information and rules for the operation of the salary sacrifice scheme in conjunction with Bike to Work for the provision of bicycles and equipment.

What is the scheme?

The cycling initiative allows employees to purchase a bike and associated equipment tax free. This is the carrot the Government is using to get motorists out of their cars and cycling to work. The Government wants 10 per cent of all journeys by 2020 to be undertaken by bicycle and has introduced the scheme to persuade 150,000 commuters to use the bicycle for short journeys. Currently just 4 per cent of Dublin commuters travel by bicycle to work, one of the lowest figures in Europe. The Minister for the Environment John Gormley has announced a €5 million initiative in his carbon budget to upgrade cycle paths in Dublin.

Who can apply for the tax exemption?

The scheme must be operated by an employer. The bicycle can be funded by either the employer or through salary sacrifice of the employee, but it must be purchased by the employer. If employers pay for the bicycle, they can claim it as a tax exempt benefit-in-kind. Where funded by salary sacrifice there will be savings on tax, PRSI and levies. The scheme means an effective saving of at least 52 per cent on the cost of a new bicycle for a top rate taxpayer.

How does it work?

The employee would choose a bicycle and any associated safety equipment (up to a maximum value of €1,000) and the employer would purchase same on behalf of the employee.

How will it be enforced?

It is not envisaged that there will be a notification process involved, but 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.

What equipment is covered?

The list of equipment covered under the scheme is exhaustive.
It includes:

• cycle helmets
• bells
• horns
• lights
• mirrors
• mud guards
• reflective clothing panniers
• luggage carriers and straps.

Also covered are locks and chains, pumps, puncture repair kits and cycle toolkits.

When does the exemption begin?

The scheme is scheduled to come into operation with effect from January 1st, 2009, subject to the passing of the Finance Bill by the houses of the Oireachtas.

How many employees in a firm can be covered by it?

There is no limit on the amount of employees in a company that can avail of the scheme provided that the employer agrees to participate in the scheme. However, the tax exempt benefit in kind can only be provided to an employee once every five years.

Bike to Work

Who are Bike to Work?

Bike to Work is an independent company created to help both employers and employees take advantage of the Green Transport Plan Initiative and the associated tax benefits of the scheme.

Bike to Work use their industry experience and trade contacts to get you riding to work on a bike of your choice from your local preferred participating bicycle shop.

Who is entitled to use Bike to Work?

Under the initiative, salaried employees who:

• Are Irish taxpayers.

Why use Bike to Work?

Bike to Work customers are not limited to any particular bike or accessory brands and therefore can choose the best for quality and value-for-money. This results in the optimum package of bike, accessories, and safety equipment.

Bike to Work provide a single point of contact for employers and employees wishing to take up the scheme. Bike to Work will assist you in setting up and running a successful Cycle to Work scheme at no cost to the employer. We can help you to get a scheme going in no time, offering great customer service and access to all the leading bike brands. The result? Better scheme uptake, and a host of organisational and individual gains.

Bike to Work is also fully supported nationwide and liase with independent bike dealers providing up-to-date literature and point-of-sale material.

What support will Bike to Work offer to you when the scheme is running?

Bike to Work will offer full support for handling your queries, and advice on choice of bike and safety equipment. Bike to Work partners (the cycle shops in your area who are partnering with Bike to Work) will be your local port of call for test riding etc. Once the bike package is purchased these local bike shops will also handle servicing and any warranty issues.

Savings and money matters

What is a salary sacrifice arrangement and how do I make my savings?

A salary sacrifice happens when an employee gives up the right to receive part of the pay due to them under their contract of employment in return for the employer’s agreement to provide some form of non-cash benefit, in this case the purchase of a bicycle and related equipment. You are paying back the purchase of your goods from gross, rather than net.

Is there any limit on the price of the bike I can obtain?

No, there is no limit on the price of the bike, but you will only be able to tax relief up to a maximum of €1,000. The balance of the purchase will be liable to tax in the standard way.

Ownership

Is the bike mine straight away?

Yes, the bike and goods remain the property of the employee but the employee has an obligation to pay back the purchase price, minus the savings in tax, to the employer.

What happens if the bike gets stolen before I’ve paid for it?

It will still be down to you to complete the full payment even if you no longer possess the bike. It is very important to insure the bike, and any goods fitted to the bike, to safeguard against the losses following theft. You can obtain safety equipment from Bike to Work partnering shops, where you can ask for approved ‘Secure’ D-locks and cable locks to conform to insurance companies requirements.

What cycle-related equipment is tax-allowable under the scheme?

Bells, clips, dress guards, helmets, horns, lights, locks, mirrors, mud guards, panniers and straps, are all included, as are pumps, puncture repair kits, cycle tools, reflectors and reflective clothing. While raingear isn’t covered outright, clothing that is both waterproof and reflective is covered.

How Bike to Work operates

How do I go about getting a tax-free bike through Bike to Work?

The scheme is a voucher scheme and you will need to apply for a voucher to redeem against your goods when you go to collect them from a local participating bicycle shop. To obtain your voucher you need to:

1. Your company signs up for the scheme.
2. Visit your local participating bicycle shop to choose your equipment and obtain a written quote.
3. Return to your company microsite and submit your application.
4. Bike to work will invoice your employer for the bike package.
5. Complete and sign the Purchase Agreement and return it to your HR person, at your participating company.
6. Once payment is made for the bike package by the company we will email you your voucher.
7. Redeem your voucher at the bike shop and collect your goods (you must provide your Company photo ID card or current Drivers license or Passport to do this).
8. The employee then starts to pay back the loan from gross salary, via salary sacrifice.

Are there any eligibility criteria for employees?

The Scheme is open to all salaried full- and part-time employees.
To take advantage of the tax breaks that result from salary sacrifice please also note: You need to be an Irish taxpayer

What is the payback period?

The payback period will be chosen by your Employer. It will be between a single salary period and 12 months.

How many times a week to I have to use the bike for work?

There is no requirement for you to cycle to work for a specified number of days throughout the year and there is no special requirement for you to record your trips. You can also use the bike for leisure at weekends and on holiday.

Do I have to keep a record of my commuting mileage?

The Department of Transport does not expect employees to keep a record of mileage.

Insurance

Is it my responsibility to insure my bike?

Yes, even though you are still paying for your bike through salary sacrifice.

What’s the best way to insure the bike?

Household policies are usually much cheaper than specialist policies but you must ensure that the insurer covers the bike when in storage away from your home. You also need to check that there’s no upper limit on a claim (if you have a reasonably expensive bike). If your bike cannot be covered on your home insurance then specialist insurers are available.

Getting the bike mail order

Can I get a bike from Bike to Work mail order?

Bike to Work partner shops are capable of supplying bike packages mail order from their shops, under the Government’s green travel plan. However, there are distinct advantages when buying from your local bike shop that will be the first port of call for advice, servicing, after sales and warranty.

Maintenance

Do I need to maintain the bike myself?

You are responsible for maintaining the bike for your own use. Your local shop will be able to advise you about necessary servicing depending on how you use your bike. They are also likely to give your bike a first free service once you have bedded it in.

Changing jobs

What happens if I leave my job before I’ve finished paying for my bike?

Under the terms of the purchase agreement, the agreement to pay your loan is "non-cancellable". This means that you will need to settle all outstanding monies before you leave. The outstanding balances will be deducted from your final net salary payment. Settlement will be from net pay because once you leave the employment, you also leave the bike scheme, and are no longer eligible for tax deductions.

Effects of salary sacrifice

How will salary sacrifice affect my pension?

Your pension contributions are payable on your full salary. Consequently, your pension and related benefits are not affected by the sacrifice.

What happens if I go on unpaid leave?

During approved unpaid leave such as maternity leave, the hire agreement period will be extended by the number of months when the salary was not paid and the Employer was not able to collect payments.

And maternity/paternity/parental/sickness leave?

Your reduced income may also have an effect on the following:

During maternity/paternity/parental/adoption leave: you will continue to have the bike and equipment on loan during your absence with your gross salary still at the reduced level according to the salary sacrifice arrangements. You will continue to have deductions made from any payments you are receiving and/or will accrue a debt that will be recovered as soon as you return to work and receive a payment from your employer.

What happens if I am made redundant or my contract is terminated?

If you leave the Employer before the final deduction has been made from your salary you will be obliged to pay the remaining amount in full. What happens if I change my mind after joining the scheme? Under the unique terms of the scheme it is not possible for you to cancel the repayment. You are therefore committed to making the salary sacrifice for the duration of the repayment period. If your employment is terminated during the repayment period you will still be liable to complete payments identified in the repayment agreement. This means that you must be sure you are happy entering the scheme and with the selection you have made.

I want to join the scheme – what next?

Visit your local bike retailer and follow the steps set out above to order your voucher.