Welcome to the fantastic Bike to Work Scheme! Its designed to help you take advantage of the recent Government initiative offering tax free bikes for cycling to work. Using the Bike to Work scheme, your employer can help you obtain a brand new bike and safety equipment worth up to €1,000.
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 or the Universal Social Charge on their repayments.
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
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 (which cannot be more than 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 – they must pay for the bicycle.
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. In this instance, you will be exempt from benefit-in-kind taxation to a cost of €1,000. If the cost of the bicycle exceeds this amount a benefit-in-kind charge will apply to the balance.
How often can I use the scheme?
You can only avail of the scheme once in a five-year period. This applies even if you do not purchase equipment up to the €1,000 limit. The tax year in which the bicycle or equipment is provided counts as the first year. So, if you used the scheme in 2014 (regardless of the month) you would be entitled to the relief again during 2019 (from January).