Michael McGrath (Cork South Central, Fianna Fail)
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Section 118(5G) of the Taxes Consolidation Act 1997 (TCA 1997) provides for the Cycle to Work scheme. This scheme was introduced in 2009 and provides an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and associated safety equipment for an employee.

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.

Tax expenditure reports prepared by my Department have estimated the cost in the full years 2017 – 2019 at €4 million and notes that this figure is an estimate as separate returns are not required under the scheme. This estimate was increased to €4.5 million in 2020 on foot 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 estimate was €5.5 million for 2021 with the full year impact of the changes.

Further, 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.