The Cycle to Work Scheme (generally known as the Bike to Work Scheme) is a tax incentive scheme to encourage employees to cycle to work. Under the scheme an employer can pay for a new bicycle (including bicycle accessories) and the employee then repays the cost in regular instalments from their gross salary.
You are not liable for tax, PRSI or the Universal Social Charge on your repayments.
Your employer does not have to take part in the scheme. However if they do, they must offer it to all their employees. If you are self-employed you are not entitled to avail of the Bike to Work Scheme unless you pay PRSI as an employee in addition to your self-employed work.
How do I save money on the Bike to Work Scheme?
As an employee you save on the costs of cycling to work because your repayments come out of your salary before tax, USC and PRSI are deducted. This means that someone on the highest rate of tax will save almost half of the cost of a new bike and equipment.
How much can I spend on the Bike to Work Scheme, and how often can I use it?
The scheme applies to bikes and equipment up to the value of €1,250 and ‘e-bikes’ and related safety equipment up to the value of €1,500.
As an employee you can use the scheme once every 4 years. The four-year span between tax breaks is counted by tax year. If you bought a bike in 2017, regardless of the month, you could buy a new bike and avail of the next tax relief in January 2021.
What equipment does the Bike to Work Scheme cover?
The scheme covers the following items, which must be purchased as new (not second-hand):
- New bikes and tricycles
- New electric bikes (electrically-assisted bikes that require some effort to propel)
- Cycle helmets
- Bells and horns
- Lights (including dynamo packs)
- Mudguards and skirt guards
- Cycle clips
- Panniers, luggage carriers and straps
- Locks and chains
- Puncture repair kits and cycle tool kits
- Reflective clothing
- Bike reflectors
The scheme does not include motorbikes, mopeds, scooters or electric-bike conversion kits.
How do I buy a bike under the Bike to Work Scheme?
You can choose your bike by visiting a bike shop and selecting the bike and equipment that you want to buy. Next, inform your employer of this choice. The employer will then pay the bike shop or supplier for the bike and equipment directly. It’s important to note that your employer cannot reimburse you if you make the payment.
You must sign a written agreement stating that the bike is for your own use and you will use it for what the Revenue Commissioners consider qualifying journeys: getting to and from work.
Your employer then sets up salary deductions over an agreed time frame of up to 12 months to recoup the costs. These deductions can be made weekly, fortnightly or monthly depending on your salary arrangements.
What if my employer buys me a bike and doesn’t charge me for it?
That is acceptable and under the scheme you will not be taxed for benefit in kind if you receive a bike from your employer as long as the cost of the bike and equipment does not exceed a total of €1,250 or €1,500 for an e-bike.