1000 euro Cycling incentive explained !

There has been a bit of confusion about how the new scheme will work . Todays’ Irish times explains it well –

 

How to claim and what it covers

How much is this new incentive going to cost the taxpayer?

The Department of Finance estimates it will only cost from €200,000-€400,000 annually depending on the take-up of the scheme.

And what’s the point?

The cycling initiative is the carrot the Government is using to get motorists out of their cars with plenty of stick to come. The Government wants 10 per cent of all journeys by 2020 to be undertaken by bicycle and to persuade 150,000 commuters to use the bicycle for short journeys. Currently just 4 per cent of Dublin commuters travel by bicycle to work, one of the lowest figures in Europe. The Minister for the Environment John Gormley has announced a €5 million initiative in his carbon budget to upgrade cycle paths in Dublin. Details of the scheme will be in the Finance Bill.

Who can apply for the tax exemption?

The scheme must be operated by an employer. The bicycle can be funded by either the employer or through salary sacrifice of the employee, but it must be purchased by the employer. If employers pay for the bicycle, they can claim it as a tax exempt benefit-in-kind. Where funded by salary sacrifice there will be savings on tax, PRSI and levies. The scheme means an effective saving of at least 41 per cent on the cost of a new bicycle for a top rate taxpayer.

How does it work?

The employee would choose a bicycle and any associated safety equipment (up to a maximum value of €1,000) and the employer would purchase same on behalf of the employee.

How will it be enforced?

It is not envisaged that there will be a notification process involved, but the purchase of bicycles and associated safety equipment by employers for employees will be subject to the normal Revenue audit procedure with the normal obligations on employers to maintain records.

What equipment is covered?

The list of equipment covered under the scheme is exhaustive. It includes cycle helmets, bells, horns, lights, mirrors, mud guards, reflective clothing panniers, luggage carriers and straps. Also covered are locks and chains, pumps, puncture repair kits and cycle toolkits.

When does the exemption begin?

The scheme is scheduled to come into operation with effect from January 1st, 2009, subject to the passing of the Finance Bill by the houses of the Oireachtas.

How many employees in a firm can be covered by it?

There is no limit on the amount of employees in a company that can avail of the scheme provided that the employer agrees to participate in the scheme. However, the tax exempt benefit in kind can only be provided to an employee once every five years.

© 2008 The Irish Times

This article by RONAN McGREEVY

2 COMMENTS

  • jude

    All of this is explained in http://www.biketowork.ie
    Free service to employers and takes out all of the hassle of the admin to the revenue.

  • Hydrolyze

    Gday! Wonderful idea, but might this genuinely operate?

    GRISELDA

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