The Cycle to Work Scheme is a tax incentive scheme which aims to encourage employees to cycle to and from work. Under the scheme employers can pay for bicycles and bicycle equipment for their employees and the employee pays back through a salary sacrifice arrangement of up to 12 months. The employee is not liable for tax, PRSI, levies or the Universal Social Charge on their repayments.
How do I pay for the bicycle?
Usually your employer pays the supplier for the bicycle and sets up a ‘salary sacrifice’ arrangement from your salary over an agreed time frame (no more then 12 months). This generally means that you visit the shop, select the equipment you wish to buy and have the shop invoice your employer directly for the cost. Note that the tax exemption does not apply if you pay for the bicycle and are reimbursed by your employer.
The repayment for the bicycle and equipment is then deducted from your gross salary (this means before income tax, PRSI, pension levies or Universal Social Charge are deducted). These deductions can be made weekly, fortnightly or monthly depending on your salary payment arrangement. Your employer can also buy the bicycle on your behalf and not require you to pay for it.
You can only avail of the scheme once in a 4 year period. This amount will increase to €1,250 in respect of bicycles and €1,500 in respect of ‘e-bikes’ as part of the Government’s Jobs Stimulus Plan.
What equipment does the scheme apply to?
The scheme applies to new bicycles and pedelecs (electrically assisted bicycles which require some effort from the cyclist). It does not cover motorbikes, scooters or mopeds.
Purchase of the following new safety equipment is also covered:
Cycle helmets which conform to European standard EN 1078
Bells and bulb horns
Lights, including dynamo packs
Mirrors and mudguards to ensure that the rider’s visibility is not impaired
Cycle clips and dress guards
Panniers, luggage carriers and straps to allow luggage to be safely carried
Locks and chains to ensure cycle can be safely secured
Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs
Reflective clothing along with white front reflectors and spoke reflectors
You must use the bicycle and safety equipment mainly for qualifying journeys. This means the whole or part (for example between home and train station) of a journey between your home and your normal place of work. Employers do not have to monitor this but you will be asked to sign a statement saying that the bicycle is for your own use and will be mainly used for qualifying journeys.
There is a limit of €1,250 in respect of bicycles and €1,500 in respect of ‘e-bikes’ as part of the Government’s Jobs Stimulus Plan. (this includes bicycles, safety equipment and delivery charges). If you spend more than this limit you are liable for a benefit-in-kind income tax charge.
What the employer does:
Check if your employer will take part in the scheme. If they will, come to Garys Cycles Bike Shop and pick out your bike and anything else you want.
We will advise you which bike suits you best, whether you want comfort or speed, or both!
We then give you an invoice which you pass on to your employer.
When your employer pays us you can pick up your bike and accessories.
Please note: Bikes must be picked up no later than 1 month, we cannot hold a bike for longer than that period.
We do advise you put a deposit on a bike and this is refunded when we get full payment from your employer, if no deposit is given we only treat this as a quote and will order/source a bike when we receive payment. (Please note with the current demand of bike we highly advise putting down a deposit).
Your employer will then deduct that amount from your gross wages over the coming year.
If you are on the higher tax bracket and you want to purchase a bike/accessories for €1250 you get 50% off.
Similarly, if you are on the lower tax rate you get approximately 30% off.
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