Cycle to Work Scheme Application Form Click here to download the Word document

Cycle to Work Scheme Terms and Conditions Click here to download the Word document

The Minister for Finance has introduced the Cycle to Work scheme that enables many people living a short distance from work or train station to reduce their dependence on car use.

The scheme applies to all staff employed by VECs, and only to new bicycles and bicycle safety equipment purchased from approved suppliers. And the scheme covers bicycles and accessories up to a maximum cost of €1,000 once every 5 years on behalf of an employee.

The legislation allows the employer to incur the expense of providing an employee with a new bicycle,once every 5 years, without the employee being liable for benefit-in-kind taxation. It also permits the benefit-in-kind tax exemption to apply in the context of salary sacrifice, that is, where an employee agrees to forego or sacrifice part of his/her salary in lieu of the provision of new bicycle by the employer. The employee will not pay tax. PRSI, income levy or pension related deduction on the remuneration sacrificed.

REQUIREMENTS OF THE SCHEME

Salary sacrifice by an employee in respect of the bicycle will be acceptable to the Revenue Commissioners as being effective for tax purposes under the following conditions:

• There must be a bona fide and enforceable alteration to the terms and conditions of employment, i.e. exercising a choice of benefit instead of salary.
• The alteration must not be retrospective and must be evidenced in writing.
• There must be no entitlement to exchange the benefit for cash.
• The choice exercised (i.e. benefit instead of cash) cannot be made more frequently than once in a five-year period
• The choice exercised must be irrevocable for the relevant year for which it is made.

The salary sacrifice will have no impact on pension contributions or on pension benefits.

APPLICATION FOR THE SCHEME

Individuals wishing to avail of the Cycle to Work Scheme are required to:

1. Read and agree to the conditions governing the scheme (Appendix 3).
2. Complete an Application Form (Appendix 1) which outlines the bicycle and/or bicycle safety equipment to be purchased.
3. Sign the Salary Deduction Authorisation Form (Appendix 2 which sets out the salary sacrifice for the items requested, i.e. the total cost of the bicycle and/or bicycle safety equipment as stated on the invoice

Applications may be submitted to the administration office in Longford VEC at any time during the year.

The application must be completed in conjunction with the supplier. It will contain information on the new bicycle/cycle safety equipment supplied and the details of the supplier. The supplier must attach the relevant invoice. The supplier must also accept that the payment from the VEC will be made by Electronic Funds Transfer (EFT) only.

SALARY DEDUCTION

The Salary Deduction Authorisation Form sets out the salary sacrifice for the items requested.

The following criteria should be noted regarding the deductions from salary:

1. Salary deductions will commence from salary on the earliest possible salary payment date following receipt of the application form.
2. All salary deductions must be completed by the last payroll in November of the calendar year in which they commence.
3. An employee may opt to complete the salary deductions over a shorter period. 4. When an employee is scheduled to come off the payroll on a date before November of the year they apply for the scheme, the entire salary sacrifice must be recovered by their last salary payment.

Once the salary deduction arrangements have been put in place, the bicycle / cycle safety equipment may be collected from the supplier. The employee should be notified in writing when the deductions will commence.

DISSEMINATION OF INFORMATION

This circular can be accessed on the Department of Education and Skills web page: www.education.ie.

QUERIES

Queries regarding the operation of this scheme should be directed by email to: admin@longfordvec.ie.