Brendan Griffin (Kerry, Fine Gael)
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157. To ask the Minister for Finance if he has been approached by the Department of Transport to consider expanding the bike-to-school provision; if so, if an anticipated cost figure has been established; and if he will make a statement on the matter. [17194/24]

Michael McGrath (Cork South Central, Fianna Fail)
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I understand the Deputy’s office have confirmed that this Parliamentary Question relates the Cycle to Work Scheme and a proposal to expand the scheme to include a Bike-to-School provision.

Section 118(5G) of the Taxes Consolidation Act 1997 (TCA) 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 may include items such as helmets, lights, bells, mirrors and locks.

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. Since 1 January 2023, the 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.

While my Department's Budget 2024 Tax Expenditure Report has estimated the cost of the scheme at €5.5m for 2022, this figure is a tentative estimate as the Cycle to Work Scheme operates on a self-administration basis so there is no notification procedure for employers involved. Accordingly, Revenue do not have statistics available on the number of people availing of the scheme or the associated cost.

I can confirm that I have not received a proposal from the Department of Transport either in 2023 or to date in 2024 which proposes the expansion of the Cycle to Work Scheme to include a Bike-to-School provision. Without the details of any proposal it is not possible for my Department to provide an estimate of the cost.

However, it should be noted that BIK is a charge to tax which 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/or related safety equipment is provided by an employer to either their director or someone in their employment. Where an employer-employee relationship does not exist, for example, in the case of school children or students, such individuals can’t qualify for the scheme.

I should add that including a Bike-to-School provision would likely add to the administrative burden for employers of participating in the scheme. Additionally, I would expect considerable deadweight and equity concerns in such a proposal.

Furthermore, as the Deputy will appreciate, the expansion of any tax expenditure measure creates a cost and that cost must be recovered elsewhere. For these reasons, while the scheme is kept under review by officials, I have no plans at present to change the scope of the scheme.

Further information and guidance regarding the Cycle to Work Scheme can be found on Revenue’s website at the following link:

www.revenue.ie/en/jobs-and-pensions/taxation-of-employer-benefits/cycle-to-work-scheme.aspx