SME Payroll Bureau Services Provider Ireland

Page 77 of 116

Question:

An employer operates the cycle to work scheme via the salary sacrifice arrangement and recovers the cost of the bicycle and safety equipment up to a maximum of €1,000 over a 12 month period. Where the cost of the bicycle and safety equipment exceeds €1,000, how should the employer deal with the excess amount?

Answer:

The excess amount should be recovered from the employee in the next pay run as a net deduction (i.e. after calculation of tax, PRSI and USC).

Where the excess amount is deducted from the employee over a period of time (e.g. 12 months to match the salary sacrifice arrangement), this will give rise to a taxable BIK in the form of a preferential loan for as long as the amount (or any part of the amount) remains outstanding.