Michael McGrath (Cork South Central, Fianna Fail)
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Section 118(5G) of the Taxes Consolidation Act 1997 provides for the Cycle to Work scheme. This scheme offers an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and/or associated safety equipment for one of their employees (or directors) to use, in whole or in part, to travel to work. Associated safety equipment includes helmets, lights, bells, mirrors and locks but does not include child seats or trailers.

One of three thresholds applies to the amount of exempted expenditure. The applicable threshold depends on the type of bicycle purchased and includes related safety equipment. From 1 January 2023, the Cycle to Work scheme applies to the first:

• €3,000 of expenditure in relation to a cargo or e-cargo bike;
• €1,500 of expenditure in relation to a pedelec or e-bike; or
• €1,250 of expenditure in relation to any other type of bike.

The employer and employee may also enter into a Revenue-approved salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary in exchange for a bicycle and/or related safety equipment

BIK is a charge to tax which only applies where an employer provides a benefit to either their director or employee. Therefore, the exemption from BIK under the Cycle to Work scheme is only applicable where the bicycle and/or related safety equipment is provided by an employer to either their director or someone in their employment.

Self-employed individuals generally can’t qualify for the Cycle to Work scheme because an employer-employee relationship does not exist. Likewise, they generally are not eligible for the exemption from tax in respect of sacrificed remuneration because salary sacrifice arrangements may only be entered into between an employer and their director or employee.

Furthermore, as the Deputy will appreciate, the expansion of any tax expenditure creates a cost to the Exchequer in terms of revenue foregone and that cost must be recovered elsewhere.

For these reasons, while the Cycle to Work scheme is kept under review by officials, I have no plans at present to change the scope of the scheme.

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