On this page
- What is the Cycle to Work scheme?
- What is the purpose of the scheme?
- What are the limits?
- Who purchases the bicycle and/or safety equipment?
- What can I purchase through the scheme?
- What is a Salary Sacrifice Agreement?
- How much can I save?
- How are savings made?
- Can home-based employees avail of the scheme?
- Can I avail of both the Ticketscheme and Cycle to Work schemes?
- Ownership – who owns the bicycle and/or safety equipment?
- How long does the scheme last for?
- How often can I get a bike through the scheme?
- What happens if my bike is faulty?
- Who is responsible for maintaining the bike?
- Whose responsibility is it to insure the bike?
- What happens if the bike gets stolen before I have completed all Salary Sacrifice repayments?
- What happens if I do not spend the full value that I apply for?
- What happens if I leave my job, retire or I’m made redundant?
- What happens if I go on maternity/paternity/adoptive leave?
- Can I purchase a bike from one retailer and equipment from another?
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 one bicycle and/or allowable safety equipment, which should be used primarily for part or all journeys to/from work.
Under the scheme you don’t pay Income Tax, PRSI or Universal Social Charge on the price of the bicycle and/or safety equipment up to the value of €1,000. You can save up to 52% of the retail cost but the average savings range from 28.5-48.5% based on marginal tax rate (20% basic and 40% Higher,) USC @4.5% and PRSI @4%.
To take part in the Cycle to Work scheme your employees will need to agree to reduce (sacrifice) an agreed amount of their salary for a set amount of time, which can be no longer than 12 months.Back to top
What is the purpose of the scheme?
The purpose of the scheme is to encourage more employees to cycle to and from work, or between work places, thereby contributing to lowering carbon emissions, reducing traffic congestion and improving health and fitness levels.Back to top
What are the limits?
There is a limit of €1,000 on the benefit and you can only avail of the benefit and Tax savings once every five tax years.Back to top
Who purchases the bicycle and/or safety equipment?
The employer must purchase the bicycle and/or safety equipment for you so that you can make your Income Tax, PRSI and USC savings via Salary Sacrifice The exemption will not apply where an employee purchases a bicycle and/or safety equipment and gets reimbursed by his or her employer.Back to top
What can I purchase through the scheme?
You can get 1 pedal bicycle/tricycle/pedelec (an electrically assisted bicycle which requires some effort on the part of the cyclist in order to effect propulsion). It will not cover motorbikes, scooters or mopeds or second hand bikes.
The following safety equipment is also covered by the exemption:
- Cycle helmets which conform to European standard en 1078
- Bells and bulb horns
- Lights, including dynamo packs
- Mirrors and mudguards to ensure riders 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
What is a Salary Sacrifice Agreement?
A Salary Sacrifice agreement whereby an employee agrees to forego part of their salary to cover the costs of the purchase in this case of one bike and/or allowable safety equipment. In such circumstances an employee will not be liable to pay Income Tax, PRSI or USC on the salary foregone. For the Cycle to Work scheme Salary Sacrifice must be completed over a maximum of 12 months from the date of provision of the bicycle and/or safety equipment. The Salary Sacrifice period can range from anything between 1 – 12 months and is at your employer’s discretion.
To be eligible to partake in the Cycle to Work scheme you will be required to sign a Salary Sacrifice Agreement, 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 Cyclescheme Ireland online application process.Back to top
How much can I save?
You can save up to 52% of the retail cost but the average savings range from 28.5-48.5% based on marginal tax rate (20% basic and 40% Higher,) USC @4.5% and PRSI @4%.Back to top
How are savings made?
Savings are made because Salary Sacrifice reduces the Gross salary – before any Income Tax, PRSI or USC has been deducted – so the amount of Tax, PRSI and USC paid is less than usual.
Please see the below guide which will give you a clearer idea of what you might save and what your monthly deductions might be.
If you make an application for €1,000 for 1 bicycle and allowable safety equipment you pay €83.33 per month for 12 months so €1,000 is taken out of your Gross Salary and then your Income Tax, PRSI and USC savings are applied.
The above guide highlights the Average Employee Saving of 28.5-48.5% with an assumed marginal rate of 4.5% for USC & 4% for PRSI.
The maximum saving for the Cycle to Work Scheme is 52% for employees earning over €70,045.
*Please note this table is for guidance purposes onlyBack to top
Can home-based employees avail of the scheme?
Yes. If the bicycle is used for work related journeys, for example trips to the post office or to collect office supplies.Back to top
Can I avail of both the Ticketscheme and Cycle to Work schemes?
Yes. These schemes are not mutually exclusive.Back to top
Ownership – who owns the bicycle and/or safety equipment?
The bicycle and/or safety equipment immediately becomes the property of the employee on collection but the employee has a legal obligation to pay back the employer the full purchase price over the 1-12-month period.Back to top
How long does the scheme last for?
The Salary Sacrifice reductions can take place over a maximum of a 12-month period and is at the discretion of the employer.Back to top
How often can I get a bike through the scheme?
Employees can request a bike through the scheme once every 5 Tax years.Back to top
What happens if my bike is faulty?
Most bicycles will come with a 12 month warranty, you will need to visit your chosen Cyclescheme Partner Bike Store so they can assess the issue and decide whether the fault is covered under warranty, if it is it will be either repaired or replaced. The store will be able to advise you on this. Either way maintenance of the bike is the responsibility of the employee.Back to top
Who is responsible for maintaining the bike?
It is the employees responsibility to maintain the bike and ensure it is roadworthy. The Cyclescheme Partner Bike Store that you get your bike from will be able to advise you about necessary servicing and bike maintenance.Back to top
Whose responsibility is it to insure the bike?
It is the employees responsibility to insure the bicycle and any associated accessories that you get via the scheme.
Please note that if your bike is unfortunately stolen you will not be eligible to re-join the scheme again for 5 Tax years from your initial application and will still have to pay any outstanding Salary Sacrifice payments to your employer.
You can also obtain a discount on bike insurance via Cyclescheme and our partner Blue Insurance. Please visit: http://www.bicycleinsurance.ie/?affiliateno=CY05500 to see what is on offer and if you want to proceed please email firstname.lastname@example.org for the promo code and use this to obtain your discount when making your online insurance application.
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What happens if the bike gets stolen before I have completed all Salary Sacrifice repayments?
If the bike is unfortunately stolen then you have you are still liable to pay any remaining Salary Sacrifice re-payments, and under the legislation you can still only enter the scheme once every 5 Tax years.
It is very important to insure the bike, to safeguard against the losses following theft. It is suggested by An Garda Síochána that you spend approximately 10-20% of the cost of your bike on a suitable bike lock.Back to top
What happens if I do not spend the full value that I apply for?
The Salary Sacrifice deductions are calculated using the amount you apply for and which are specified on your Salary Sacrifice Agreement If you do not fully utilise the amount, your salary will still be reduced by the amount that you applied for and which you agree to and when signing your Salary Sacrifice Agreement. If there is a shortfall, you can obtain relevant safety equipment to make up the difference. The shop cannot give you any change or store credit as this is against the Revenue rules for the schemeBack to top
What happens if I leave my job, retire or I’m made redundant?
If you leave, retire or are made redundant before all Salary Sacrifice deductions have been made by your employer you are settle the full outstanding balance with your employer before you leave from your final salaries.Back to top
What happens if I go on maternity/paternity/adoptive leave?
If you go on maternity/paternity/adoptive leave during your Salary Sacrifice period, any remaining Salary Sacrifice deductions will continue to be taken from your salary as long as you have the sufficient funds available. Please note that the Salary Sacrifice period cannot extend over any longer than a 12-month period under any circumstances.Back to top
Can I purchase a bike from one retailer and equipment from another?
Revenue stipulates that the purchase of the bicycle and safety equipment must be processed in one transaction only.Back to top