Holly Cairns (Cork South West, Social Democrats)
Link to this: Individually | In context | Oireachtas source

314. To ask the Minister for Finance the estimated cost of allowing the cycle to work scheme to cover the purchasing of child seats or trailers annually; and if he will make a statement on the matter. [26545/21]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Section 118(5G) of the Taxes Consolidation Act 1997 (TCA 1997) provides for the Cycle to Work scheme. This scheme provides an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and associated safety equipment for an employee.

Under section 118B TCA 1997 an employer and employee may also enter into a salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary, in exchange for a bicycle and related safety equipment. Safety equipment includes helmets, lights, bells, mirrors and locks but does not include child seats or trailers.

Where a bicycle or safety equipment is purchased under the Cycle to Work scheme or through a salary sacrifice arrangement certain conditions must be met, for example:

- The exemption applies to the first €1,250 of expenditure incurred by the employer in obtaining a bicycle and related safety equipment. This exemption limit is increased to €1,500 for pedelecs or ebikes and related safety equipment. Employers may incur costs in excess of these limits, but any such excess will not qualify for the exemption and will be liable to tax. A salary sacrifice arrangement is subject to the same monetary limits.

- The bicycle and related safety equipment must be new and must be purchased by the employer.

- The bicycle and related safety equipment must be used by the employee or director mainly for the whole or part of their journey to or from work.

- An employee or director can only avail of the Cycle to Work scheme once in any 4 year period. A salary sacrifice arrangement is subject to the same time limits and any salary sacrifice arrangement entered into must be completed within a 12 month period.

The cycle to work scheme operates on a self-administration basis, and relief is automatically available provided the employer is satisfied that the conditions of their particular scheme meet the requirements of the legislation. There is no notification procedure for employers involved. This approach was taken with the deliberate intention of keeping the scheme simple and reducing administration on the part of employers. Therefore the cost of the existing scheme and of any potential changes can only be estimates.

The inclusion of child seats and trailers in the scheme or the extension of the scheme beyond employees would create an additional cost and that cost must be recovered elsewhere.  The additional cost would depend on the marginal rate of tax of individual taxpayers benefitting from the expansion of the scheme, the cost of the seats and trailers and the effect of the cap on the amount of marginal benefit available. 

For that reason, while the scheme is kept under review by officials, I have no plans at present for its expansion.

Further guidance regarding the cycle to work scheme and salary sacrifice arrangements can be found on Revenue’s website.