Róisín Shortall (Dublin North West, Labour)
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Question 167: To ask the Minister for Finance if he will provide details of the cycle to work scheme introduced in the Finance (No.2) Act 2008; the progress made to date to implement the scheme; and the number of Departments and public sector agencies actively availing of this scheme. [15127/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The cycle to work scheme came into operation on 1 Jan 2009. The purposes of the scheme are to encourage more employees to cycle to and from work, to contribute to lowering carbon emissions, to help reduce traffic congestion, and to help improve health and fitness levels.

The scheme allows an employer to provide an employee with a bicycle (including an electrically assisted bicycle) and cycle safety equipment, e.g. helmet, lights, reflective clothing, as a benefit of his/her employment without the employee being liable for benefit-in-kind taxation. The scheme applies where the bicycle is used by the employee for travelling to and from work or for travelling between workplaces.

The scheme can be implemented through salary sacrifice arrangements in a similar manner to the existing Travel Pass Scheme. Under such an 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 in order to cover the cost of the bicycle and safety equipment. Any salary sacrifice arrangement must be completed within a maximum period of twelve months and the arrangement will be reflected in the employee's pay over that period.

The bicycle and safety equipment up to the value of €1,000 are exempt from benefit-in-kind taxation under the scheme. Employees will not be liable to income tax, employee PRSI, or levies on the cost of the bicycle and safety equipment up to this limit. Where the cost exceeds this amount, a BIK charge will apply to the balance. The scheme is available to individual employees once only in a five year period.

The employer will also benefit in that employer PRSI is not payable on the cost of the bicycle and/or safety equipment. Employers will not, however, be able to reclaim the VAT paid on the bicycle and/or safety equipment.

Participation in the scheme is voluntary for employers. However, when an employer agrees to participate, he or she must make the scheme generally available, on an equal basis, to all employees requesting it.

There is no notification procedure for employers to indicate to the Revenue Commissioners that they are operating the scheme. However, 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, salary sacrifice agreements between employer and employee, such agreements to include a statement from employees that the bicycle and safety equipment are for their own use and will be used for travelling to and from work).

The cycle to work scheme is effectively available since 1 January 2009 to private sector employees where employers agree to operate the scheme.

Implementation of the scheme in the civil service is being dealt with by my Department. Introducing the scheme in the civil service has given rise to a number of issues including that of public procurement. These issues will be resolved shortly. I also understand that the Office of Public Works will be advertising in the near future seeking expressions of interest from those selling bicycles and pedelecs (electrically assisted bicycles), and who are prepared to supply bicycles and cycle safety equipment to those availing of the scheme in the civil service.

A circular providing for a scheme in the civil service will be issued as soon as practicable and those arrangements should provide a framework for the implementation of a similar scheme in the wider public service.