Oct 2020
6
Cycle to Work Scheme Changes: What you need to know
In the July Jobs Stimulus Plan, announced by Taoiseach Micheál Martin, changes were introduced to the existing Cycle to Work scheme. The Cycle to Work scheme is a government initiative that was introduced in January 2009 and allows the employer to purchase a bicycle and safety equipment for an employee for travelling to and from work. The cost of the bicycle and safety equipment can be deducted from the employee’s wages in the form of salary sacrifice. This salary sacrifice is set up as an allowable taxable deduction and reduces the gross salary for PAYE, USC and PRSI purposes by the amount of the salary sacrifice. The salary sacrifice cannot be more than 12 months and the employer and employee must agree how the deductions can be made.
The allowance for the cost of the normal bike and safety equipment was €1,000 and in July this was increased by €250 to €1,250. The allowance cost of an electric bike and safety equipment rose to €1,500 from the previous rate of €1,000. The existing period to avail of the scheme every five years is being reduced to every four years. The tax year that the bike is purchased counts as the first year under the scheme. The bike and safety equipment must be used as part of the journey the employee takes between their home and their normal place of work.
If an employer purchases a bike for an employee and does not require the employee to pay for it, the employee will be exempt from tax on the benefit on the cost of a normal bike up to €1,250 and on an electric bike for up to €1,500. If the cost exceeds these exemptions, the employee will have to pay PAYE, USC and PRSI on the balance of the cost of the bike.
An employer does not have to inform Revenue if they have employees availing of the Cycle to Work Scheme but records must be maintained by the employer for any purchases made under this scheme, such as invoices, which employee the purchase was for, payment amounts, etc.
New webinar: Employment Wage Subsidy Scheme (EWSS) - What you need to know
Join our new webinar, Employment Wage Subsidy Scheme (EWSS) - What you need to know, to learn about the latest government scheme and its impact on payroll. As the Temporary Wage Subsidy Scheme has now ended, there is a new Employment Wage Subsidy Scheme which will run until April 2021. Register now.
In this webinar, we discuss what you need to know about TWSS Reconciliation and the Employment Wage Subsidy Scheme (EWSS). We are delighted to be joined by guest panelist Sandra Clarke - President of the Irish Tax Institute & Partner at BCC Accountants. Register now.
Related links:
Don't forget about your July / August EWSS Sweepback!
Increase to CWPS Rates on 1st October 2020
Webinar: Employment Wage Subsidy Scheme (EWSS) - What you need to know
