On this page
- Who is Cyclescheme Ireland?
- What is the Cycle to Work scheme?
- How does the scheme work?
- How much can employees save?
- What are the benefits of the scheme for employers?
- What happens if the employee leaves their job or is made redundant?
- Who owns the bicycle and/or safety equipment?
- Who purchases the bicycle and/or allowable accessories?
- Is VAT payable?
- Can an employee opt out of the scheme if they no longer wish to participate?
- Is the employer subject to audit or inspection in relation to the provision or operation of the scheme?
- How often can an employee avail of the scheme?
Who is Cyclescheme Ireland?
Cyclescheme Ireland was 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 shops 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 of the best brands and models plus knowledgeable advice, an excellent aftercare service and so you can help support your local community.Back to top
What is the Cycle to Work scheme?
The Cycle to Work initiative gives your employees the opportunity to sacrifice part of their 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 your employees don’t pay Income Tax, PRSI or Universal Social Charge on the price of a bicycle and accessories for a value of up to €1,250 or up to €1,500 on e-bikes and accessories. Your employees can save up to 52% on the retail price depending on your marginal Tax rate. Please note the average saving is between 28.5-48.5%.
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
How does the scheme work?
The employer provides the bicycle and/or safety equipment to the employee who agrees to forego or sacrifice part of his or her salary every pay period for a period no longer than 12 months in order to cover the cost of the bike package purchased.
In the specific context of the provision of the bicycle and/or safety equipment Revenue will be prepared to regard salary sacrifice arrangements which meet the following conditions as being effective for tax purposes:
- There must be a bona fide and enforceable alteration to the terms and conditions of employment (exercising a choice of benefit instead of salary);
- The alteration must not be retrospective and must be evidenced in writing;
- There must be no entitlement to exchange the benefit for cash;
- The choice exercised (i.e. benefit instead of cash) cannot be made more frequently than once in a five year period; and
- The choice exercised (i.e. benefit instead of cash) must be irrevocable for the relevant year for which it is made.
How much can employees save?
Employees 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
What are the benefits of the scheme for employers?
Apart from providing an excellent benefit for your employees Employer saves on Employer PRSI on every application. PRSI is not payable on the cost of the bicycle and/or safety equipment.Back to top
What happens if the employee leaves their job or is made redundant?
If the employee leaves, retires or is made redundant before the Salary Sacrifice has finished, they will need to settle the full outstanding balance employer before they leave/from their final salary.Back to top
Who owns the bicycle and/or safety equipment?
The bicycle and/or safety equipment immediately becomes 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 from their Gross salaryBack to top
Who purchases the bicycle and/or allowable accessories?
The employer must purchase the bicycle and/or allowable accessories. The exemption will not apply where an employee purchases a bicycle and/or safety equipment and gets reimbursed by their employer.Back to top
Is VAT payable?
VAT is payable. Employers cannot claim an input credit in respect of the VAT payable as the bicycles will not be used for the purposes of taxable supplies.Back to top
Can an employee opt out of the scheme if they no longer wish to participate?
No, stipulations made by the Revenue Commissioner will not allow an employee to opt out. Once they have signed their Salary Sacrifice Agreement and deductions have commenced the employee cannot opt out.Back to top
Is the employer subject to audit or inspection in relation to the provision or operation of the scheme?
Yes the records in relation to the operation of the scheme and the correct application of the salary sacrifice arrangements can be examined by Revenue officials as part of the normal inspections or audits carried out on payroll operations.Back to top
How often can an employee avail of the scheme?
The tax exempt benefit-in-kind may only be provided to an individual employee once in any period of four consecutive tax years. The tax year in which the bicycle is provided is counted as the first year.
Employees should note that if they avail of the scheme for even a small amount of expenditure relating to the provision of bicycles and/or safety equipment they will not be able to avail of the relief again for four years.Back to top