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Cyclescheme FAQs

What is the cycle to work scheme?

The Cycle to work initiative gives you the opportunity to sacrifice part of your salary in return for a bicycle and/or accessories, which should be used primarily for part or all journeys to work. Under the scheme you don’t pay income tax, PRSI or Universal Social Charge of the price of the bicycle and/or accessories so you can save between 31% and 52% on the normal price (depending on your marginal tax rate).

To take part in the cycle to work scheme you will need to agree to reduce (sacrifice) an agreed amount of your salary for a set amount of time in return for a bicycle and/or safety equipment up to the between €100 and €1,000.

Who are Cyclescheme?

Cyclescheme are an independent limited company created to help both employers and employees make the most of the cycle to work initiative brought into place by the Green Party in the 2008 budget. Our service is completely free of charge for both employers and employees. We provide a full administration service to employers, employees and our partner stores helping many companies provide the benefit where they previously may not have had the resource to do so. We have partnered with local independent bike retailers so you have more choice, a more personalised service and so you can help support your local community.

What is a salary sacrifice arrangement and how do I make my savings?

Similar to the travel pass scheme, an employer and employee may enter into a salary sacrifice agreement whereby the employee agrees to forego part of his or her salary to cover the costs of the purchase of the bike/safety equipment.  In such circumstances the employee will not be liable to pay tax PRSI or USC on the salary foregone.  Salary sacrifice must be completed over a maximum of 12 months from the date of provision of the bicycle/safety equipment. The salary sacrifice period can range from anything between 1 – 12 months and is at your employer’s discretion.

To be eligible you will have to sign a salary sacrifice form, which will detail your gross deduction and all of the terms and conditions of the scheme.  You do not have to request this as it is part of the on line application process. A salary sacrifice happens when an employee gives up the right to receive part of the pay due to them under their contract of employment in return for the employer’s agreement to provide some form of non-cash benefit, in this case the purchase of a bicycle and related equipment. Employees pay back the purchase of the goods from gross rather than net salary between 1-12 months (depending on the set up of your company scheme) following the purchase.

How do employees get a tax-free bike for work through Cyclescheme?

Step 1. Once an employer is partnered with Cyclescheme (employers can sign up via the employer section) all employees wishing to participate visit a local Cyclescheme Partner Store to choose the bike and, if required, safety equipment. To search for local Partner Stores click on “Our Partner Stores” on the home page. If any independent bike shop is not partner with us, let us know and we will endeavour to get them on board.

Step 2. Employees then apply for a Cyclescheme Certificate online using a unique link to our secure online facility. The unique link is provided to employers and distributed to all employees. The employee will usually sign an online Salary Sacrifice Agreement at this time.

Step 3. If the employer approves their application they will countersign the Salary Sacrifice Agreement and pay Cyclescheme for the full retail price of the bike and equipment.

Step 4. Cyclescheme will then post out a paper Certificate, usually to employee’s home address.

Step 5. The Certificate is then redeemed in the bike shop and exchanged for the bike package. Salary sacrifice then commences, which will be between 1-12months. The salary sacrifice is made prior to Income Tax, PRSI and USC and, as a result, employees pay less of all.

Please note if your employer is using a Benefits Provider the process will be slightly different, your employers will advertise the scheme prior to launch and you will normally apply through your benefit providers site.

What can the bike be used for?

You can use the bike however you like, but the main use of the bike’s must be for qualifying journeys cycling between your home and work place or between different workplaces. Neither yourself or employer are required to monitor the use of the bike, but you will be required to sign a salary sacrifice agreement that states the bike must be used mainly for commuting.

Who is responsible for maintaining the bike?

It is your responsibility to maintain the bike. The partner shop will be able to advise you about necessary servicing depending on how you use your bike. Many shops offer a free first service and subsequent servicing advice depending on usage.

Whose responsibility is it to insure the bike?

It is your responsibility to insure the bike.

What's the best way to insure the bike?

Your Household policies are usually the cheapest option but you must ensure that the bike is insured when in storage away from your home, and that the bike's value doesn't exceed the upper claim limit. If the bike can't be covered on your home insurance a bicycle insurance specialist may be able to help.

What happens if the bike gets damages beyond repair?

Since you can no longer cycle to work, you have effectively left the scheme and will need to pay all outstanding monies from your next available net pay. This is why obtaining adequate insurance is critical.

Is there any limit on the price of the bike I can obtain?

No, there is no limit on the price of the bike, but you will only be eligible for tax relief up to a maximum of €1,000. Any overspend will be liable to tax in the standard way.

What happens if I do not spend the full certificate value?

The salary sacrifice deductions are calculated using the amount specified on your certificate. If you do not fully utilise the amount, your salary will still be reduced by the amount stated on your salary sacrifice agreement. If there is a shortfall, you can obtain relevant safety equipment to make up the difference. The store cannot give you any change.

What happens if I leave my job or I'm made redundant?

The agreement to pay the Salary sacrifice is non-cancellable, so you will be obliged to pay the remaining amount in full, without any tax exemptions (i.e. from your net salary). The ownership of the bike will then be transferred to you.

What happens if the bike gets stolen before it's paid for?

If the bike is stolen then you have effectively left the scheme and need to pay all outstanding monies from your net salary.  It is very important to insure the bike, and any goods fitted to the bike, to safeguard against the losses following theft. You can obtain safety equipment from Cyclescheme's partnering shops, where you can ask for  'Sold Secure' D-locks and cable locks to conform to insurance companies' requirements.

Is there a credit check?

There is no credit check.

Who can use Cyclescheme?

Employees paying tax through PAYE, who have a contract that outlasts the duration of the salary sacrifice period are eligible and have completed the employer's probationary period (if applicable).

Can I get any bike?

You can choose any bike providing your chosen Cyclescheme partner can supply it.

What accessories can I get?

Equipment you can purchase through the scheme includes:

• Cycle helmets
• Bells
• Horns
• Lights
• Mirrors
• Mudguards
• Reflective clothing panniers
• Luggage carriers and straps.

You can also obtain locks and chains, pumps, puncture repair kits and cycle toolkits.

Ownership - Is the bike mine straight away?

Yes, the bike and goods immediately become the property of the employee, but the employee has an obligation to pay back the purchase price, minus the tax savings, to the employer within 12 months.

How long does the scheme last for?

The salary sacrifice reductions can take place over a maximum of a 12-month period.

How much can I save?

Typical savings are equivalent to 31% of the retail price of the equipment but the precise amount depends on your personal tax band. An individual being taxed at the higher rate will save a bit more (around 52%) than someone who pays standard rate tax.

If the employer uses external finance, to buy the bikes, then savings may be around 5-9% less than quoted above. This is because the cost of finance has to be passed on to the employee to avoid it becoming a benefit-in-kind.

How are the savings made?

Savings are made because salary sacrifice reduces the gross salary – before any tax, PRSI or USC has been deducted – so the amount of tax, PRSI and USC paid is less than usual.

Sounds confusing?

Here’s an example of how the savings work during the salary sacrifice period, assuming the following:

• Employee is paid monthly
• Employee is a standard rate tax payer requesting a €500 Certificate
• The salary sacrifice period is 12 months
• The Employee’s monthly gross salary is €1,200.00 (€14.400 per annum)

Can an employee opt out of the scheme if they no longer wish to participate?

So, because you pay less tax, PRSI and USC your NET salary reduction is less than the GROSS salary reduction, and this is how savings are achieved. In the example, the employee makes a €41.67 contribution to the employer, but it only cost them €28.76, resulting in a saving of €12.91 per month.

No, stipulations made by the Revenue Commissioner will not allow you to opt out. Once you have signed the Salary Sacrifice Agreement all outstanding monies need to be paid back.

Can I get a bike through mail order?

Cyclescheme's partner shops are capable of supplying bike packages mail order from their shops, but there are distinct advantages when getting a bike from your local bike shop that will be the first port of call for advice, servicing, after sales and warranty. Some mail-order specialists are not part of the Cyclescheme Partner network.

How often can I get a bike through the scheme?

Employees can request a bike through the scheme once every 5 years.

Who owns the bicycle?

The bike and equipment remains the property of the employee but the employee has a legal obligation to pay back the employer the full purchase price over the 1-12-month period.

Can I use the certificate to purchase a bicycle for a family member?

No. You must use the certificate to purchase a bicycle for yourself, as 50% of the bicycles usage needs to be for commuting purposes.

Cyclescheme, 1D Bracken Business Park, Bracken Road, Sandyford, Dublin 18. Cyclescheme, a trading name of The Grass Roots Group Ireland.

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