Josepha Madigan (Dublin Rathdown, Fine Gael)
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260. To ask the Minister for Finance if his Department is considering the expansion of the cycle-to-work scheme to the self-employed; and if he will make a statement on the matter. [49507/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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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 up to a maximum of €1,250 (€1,500 in the case of e-bikes), for an employee to use, in whole or in part, to travel to work. Safety equipment includes helmets, lights, bells, mirrors and locks but does not include child seats or trailers.

From 1 August 2020, this exemption was increased from €1,000 to €1,250 for expenditure incurred by an employer in connection with the provision of a bicycle and/or bicycle safety equipment in respect of any one employee. A higher exemption limit of €1,500 applies in the case of the provision of an electric bike (which may also include bicycle safety equipment). These increases and the change to a 4-year period from a 5-year period were in line with the commitment made in the Programme for Government.

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.

Benefit-in-kind is a charge to tax that applies where an employer provides an employee with a benefit such as a bicycle, car or accommodation. Therefore, the Cycle to Work scheme is only applicable where the bicycle and safety equipment is provided by an employer to either a director or someone in its employment and thus, where an employer-employee relationship does not exist, for example, in the case of self-employed, retired individuals, or those in receipt of social welfare payments, such individuals cannot qualify for the scheme. Likewise, salary sacrifice arrangements may only be entered into between an employer and a director or employee.

Further guidance regarding the Cycle to Work Scheme and salary sacrifice arrangements can be found on Revenue’s website.