# Bike to Work scheme



## Carnmore (8 Jun 2017)

I know someone who's a higher rate taxpayer but they can only get 45% tax relief.

They are apparently not entitled to the full 52% relief because they are jointly assessed with their spouse for tax purposes. 

They understood there were only two relief bands - 52% and 31%.

Can anyone explain this?


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## BusinessFailure (8 Jun 2017)

There's no set "tax relief" figure for the cycle to work scheme.  Generally, your employer pays for the bicycle and then you repay your employer for the cost of the bicycle (up to €1000) out of your gross wage, so the tax relief you get depends solely on the amount of tax you currently pay.

I think the headlines for the cycle to work scheme read: "Save up to 52% on the price of a bicycle", but that's the most you can save; it's not a guarantee.


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## Joe_90 (8 Jun 2017)

Ya if they are paying income tax, PRSI and USC then if there is a €100 taken from their salary before tax then they should save the income tax, PRSI and USC so 40%, 4% and 8%, joint assessment is irrelevant.


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## huskerdu (8 Jun 2017)

Joint assessment might be significant if the spouse buying the bike has all the tax credits and therefore only a small fraction of their income is being taxed at 40%. If only €100 a month is being taxed at 40% and the cost of the bike of €200 is removed from the gross pay for the month, the tax saving is 100 @ 40% and 100 at 20%. ( I have ignored PRSI and USC for simplicity).


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## cremeegg (8 Jun 2017)

Totally unfair to the self employed


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## MrEarl (9 Jun 2017)

The scheme is not fair to anyone....

All it's done is drive the price of a bike up by a small fortune... who the hell ever heard of people spending close to €1k on a bike, before this scheme was launched ?

... we've all been taken for a _ride_ with this scheme imho


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## dereko1969 (9 Jun 2017)

MrEarl said:


> The scheme is not fair to anyone....
> 
> All it's done is drive the price of a bike up by a small fortune... who the hell ever heard of people spending close to €1k on a bike, before this scheme was launched ?
> 
> ... we've all been taken for a _ride_ with this scheme imho



It hasn't driven the price of bikes up, compare the prices of most bikes with UK and the usual small distortion is there (vat rates etc). What it has done is probably encourage people to buy better bikes and perhaps encouraged them to cycle in the first place, cheap bikes can still be bought under the scheme but people feel they only get the value out of it by buying at the max of the scale. It should be extended to the self-employed.


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## Cervelo (9 Jun 2017)

MrEarl said:


> The scheme is not fair to anyone....
> 
> All it's done is drive the price of a bike up by a small fortune... who the hell ever heard of people spending close to €1k on a bike, before this scheme was launched ?
> 
> ... we've all been taken for a _ride_ with this scheme imho



How is it not fair, you now can buy a €1000 bike for as little as €480 and if you don't use a voucher company you can get it for cheaper!!!


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## newirishman (9 Jun 2017)

Cervelo said:


> How is it not fair, you now can buy a €1000 bike for as little as €480 and if you don't use a voucher company you can get it for cheaper!!!


IN the same way the tax saver ticket is not fair: if you earn more than 32K, you get a 52%* relief, so only paying 480 euro net. If you are sub-32K, you only get 31(?)%* or so relief, so are paying 690 euro.
Therefore, somebody that earns less has to pay more for the same bike. Or the same bus ticket.

Not fair indeed.

*don't quote me on the exact percentage figure, depends on USC / PRSI / Taxband for your income range. But as the Irish tax system is progressive, the end result is as per post.


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## MrEarl (9 Jun 2017)

Cervelo said:


> How is it not fair, you now can buy a €1000 bike for as little as €480 and if you don't use a voucher company you can get it for cheaper!!!



It is not fair because it has caused massive inflation in the price of a bike and also, because while the tax incentive might appear like "free money" it is also being paid by the taxpayer one way or another.

I would also agree with Cervelo that it discriminates against the self employed, not to mention the unemployed (who might benefit most of all, from a cheaper form of transport !).


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## newirishman (9 Jun 2017)

MrEarl said:


> It is not fair because it has caused massive inflation in the price of a bike and also, because while the tax incentive might appear like "free money" it is also being paid by the taxpayer one way or another.  So, ultimately, it has caused massive unnecessary inflation in the cost of buying a bicycle.
> 
> I would also agree with Cervelo that it discriminates against the self employed, not to mention the unemployed (who might benefit most of all, from a cheaper form of transport !).



I'd say that most of the unemployed benefit already from free public transport tickets.

And surely nobody in Ireland would increase the prices just because the state hands out free money! That would just be unethical now, wouldn't it!


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## MrEarl (9 Jun 2017)

newirishman said:


> I'd say that most of the unemployed benefit already from free public transport tickets.



I am not entirely familiar with the entitlements, but:

public transport does not take someone everywhere they may need to go (particularly for those living outside of Dublin (or other cities) for example)

it might be less efficient in terms of medium to long term cost to the state
public transport does not offer the health benefits of cycling 



> And surely nobody in Ireland would increase the prices just because the state hands out free money! That would just be unethical now, wouldn't it!



If only that were true


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## Cervelo (10 Jun 2017)

MrEarl said:


> It is not fair because it has caused massive inflation in the price of a bike





newirishman said:


> And surely nobody in Ireland would increase the prices just because the state hands out free money! That would just be unethical now, wouldn't it!



Its not the bike shop that sets the rrp for bicycles but the manufacture and I'm sure the likes of Giant dont inflate their global rrp because Ireland has a tax incentive scheme


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## elcato (12 Jun 2017)

Two or three people in my office bought overseas online for the scheme so I don't believe prices went up either. Probably affected any haggling for discounts though.


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## Leper (13 Jun 2017)

A little off subject but probably relevant:- Mrs Lep and one of her girl friends (both in their sixties) bought two bikes on DoneDeal.  Both bikes were not new, but not too old @ €100 each. The two bikes were originally purchased on the Bike Scheme. 

I reckon there are many such like bikes lingering unused in sheds and available for purchase. So if you have any sense buy on DoneDeal and save a good few bob.


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## torblednam (13 Jun 2017)

cremeegg said:


> Totally unfair to the self employed



The same self employed who will simply take a tax deduction for the cost of the bike...?!


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## cremeegg (13 Jun 2017)

torblednam said:


> The same self employed who will simply take a tax deduction for the cost of the bike...?!



Only if their bike shop sells office equipment as well


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## torblednam (14 Jun 2017)

cremeegg said:


> Only if their bike shop sells office equipment as well



Why? Sure if they're using the bike for work then they have deductibility.


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## cremeegg (14 Jun 2017)

torblednam said:


> Why? Sure if they're using the bike for work then they have deductibility.



No. The bike to work scheme is not available to the self employed.


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## torblednam (14 Jun 2017)

cremeegg said:


> No. The bike to work scheme is not available to the self employed.



I'm not talking about the bike to work scheme. I'm talking about section 81 TCA 1997, which provides for deductions in computing profits for tax purposes of a trade. 

A sole trader who actually uses a bike for work may be entitled to a deduction.


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## cremeegg (14 Jun 2017)

Only if the bike is used "solely, exclusively and necessarily" for the purposes of the trade. Not a condition imposed in the back to work scheme available to that pampered group, the PAYE worker.


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## T McGibney (14 Jun 2017)

cremeegg said:


> *Only if the bike is used "solely, exclusively and necessarily" for the purposes of the trade.* Not a condition imposed in the back to work scheme available to that pampered group, the PAYE worker.



Which explicitly rules out the self-employed person using the bike to commute to work.

You gotta love the civil service in this country.


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## torblednam (14 Jun 2017)

cremeegg said:


> Only if the bike is used "solely, exclusively and necessarily" for the purposes of the trade. Not a condition imposed in the back to work scheme available to that pampered group, the PAYE worker.



The test is actually wholly and exclusively for the purpose of the trade. 

The "necessarily in the performance of the duties" test applies to deductions for employees under section 114.

Therefore the test for a deduction for a trader is a much broader one. A sole trader will be able to take a deduction (without any restriction by reference to the cost of the bike as applies to the BTW scheme) proportionate to their business use of the bike.


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## torblednam (14 Jun 2017)

T McGibney said:


> Which explicitly rules out the self-employed person using the bike to commute to work.
> 
> You gotta love the civil service in this country.



Unless they are a home office based self-employed person, which a very substantial proportion of self-employed people are.


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## cremeegg (14 Jun 2017)

Unless you are a trick cyclist, I don't see how you could use a bicycle in the course of a trade.


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## torblednam (14 Jun 2017)

cremeegg said:


> Unless you are a trick cyclist, I don't see how you could use a bicycle in the course of a trade.



Of course you could, in lots of businesses that don't require lugging stuff around, cycling to/from meetings etc...

But I think you're missing my point. Plenty of city / town based self employed people have no problems claiming a sizeable proportion of all sorts of costs against their trade. I don't see why they wouldn't extend whatever logic they use to apportion other costs, to their bike...


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## T McGibney (16 Jun 2017)

torblednam said:


> Unless they are a home office based self-employed person, which a very substantial proportion of self-employed people are.



Which explicitly rules out the self-employed person using the bike to commute to work. As I said.


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## torblednam (16 Jun 2017)

T McGibney said:


> Which explicitly rules out the self-employed person using the bike to commute to work. As I said.



I would say it obviates the need!


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## mc-BigE (2 Jun 2018)

sorry to drag up an old thread, but can a director(and employee) of a small LTD company(two Directors) purchase a bike with the "bike to work" scheme?


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## dereko1969 (21 Jun 2018)

I would think so, if they're an employee then they're PAYE presumably so shouldn't be a problem.


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