Jack Chambers (Dublin West, Fianna Fail)
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Section 118(5G) of the Taxes Consolidation Act 1997 (TCA) provides for the Cycle to Work scheme. This scheme was introduced in 2009 and 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 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.

Under section 118B TCA, 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.

The scheme operates on a self-administration basis. 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. Accordingly, there are no records available on the number of people availing of the scheme or the cost of the scheme.

The Budget 2022 Tax Expenditure Report prepared by my Department estimated the cost for 2020 at €4.5 million and notes that this figure is an estimate as separate returns are not required under the scheme. This estimate took account of the changes made to the scheme by Section 9 of the Financial Provision (Covid-19)(No. 2) Act 2020. This increased the allowable expenditure from €1,000 to €1,500 in respect of e-bikes and €1,250 in respect of bicycles and allowed the purchase of a new bicycle every 4 years instead of 5. The estimated costs for 2021 and 2022 were €5.5 million, respectively, with the full year impact of the changes.

Relevant Year	Estimated number of claims	Estimated revenue foregone (€m)
2020	22,000	4.5
2021	25,000	5.5
2022	25,000	5.5

The Tax Expenditure Report for Budget 2025, which will be published later this year, will include estimates for 2023. An additional cost is anticipated on foot of an extension of the exemption limit of up to €3,000 in respect of cargo bikes which was introduced in Finance Act 2022. The additional cost will depend on uptake and the marginal rate of tax being paid by the employee, however, it is not expected that the cost will be significant.