Cycle to Work
Benefit from the Government incentive 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.
Benefits to EMPLOYEES
Using the Cycle to Work scheme, your employer can help you obtain a brand new bike and safety equipment worth up to 1,000 euro. You can use a salary sacrifice arrangement to pay for the bike monthly and that means you can save up to 51% of the retail price of bike and equipment.
Benefits to EMPLOYERS
Offers employers a totally free service to help you take advantage of the recent Government initiative offering tax free bikes for cycling to work. Using the Cycle to Work scheme, your company can purchase a brand new bike and safety equipment worth up to 1,000 euro tax free, for your employees.
CYCLE TO WORK SCHEME
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.
When did the scheme come into effect?
The exemption applies to expenditure incurred by an employer on or after 01 January 2009.
What are the benefits of the scheme for employees/directors?
As the bicycle and/or safety equipment are exempt from tax the employee/director will not be liable to income tax at his or her marginal rate, employee’s PRSI or USC on the cost of the benefit, as reflected in the amount of the salary sacrificed.
What are the benefits of the scheme for employers?
The employer benefits in that the employer’s PRSI is not payable on the cost of the bicycle and/or safety equipment.
What is a qualifying journey?
The bicycle and/or safety equipment must be used by the employee or director mainly for qualifying journeys. This means the whole or part (e.g. between home and train station) of a journey between the employee’s or director’s home and normal place of work or between the normal place of work and another place of work.
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.
Can I avail of both the Travel Pass/TaxSaver Commuter Ticket and Cycle to Work schemes?
Yes. These schemes are not mutually exclusive.
Are employees availing of the scheme liable to benefit-in-kind taxation?
No. Under the scheme an employer may provide an employee with bicycle and/or cycle safety equipment without the employee being liable for benefit-in-kind taxation limited to a cost of €1000. Where cost exceeds this amount a BIK charge will apply to the balance.
What items may be purchased under the scheme?
In addition to the purchase of a bicycle the following safety equipment also qualifies:
- Cycle helmets which conform to European Standard EN 1078
- Bells and bulb horns
- Lights, including dynamo packs
- Mirrors and mudguards
- Cycle clips and dress guards
- Panniers, luggage carriers and straps to allow luggage to be safely carried
- Locks and chains to ensure the cycle can be safely secured
- Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs
- Reflective clothing along with front reflectors and spoke reflectors
Can employees choose the bicycle/safety equipment themselves?
It is for employers to decide how they will operate the scheme.
Some employers may allow employees to select the bicycle/safety equipment from the retailer of their choice and the employer may then put in place appropriate invoicing and delivery arrangements with the retailer.
Other employers may offer more limited options to employees. An employer could, for example, allow any employee to choose only from the range available from a single retailer.
How does the scheme work?
The scheme may be implemented under a salary sacrifice arrangement through the employee’s payroll (in a similar manner to the existing Travel Pass Scheme - see item 6.1 of Employers Guide to PAYE. Under this arrangement 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 (weekly/fortnightly/monthly) in order to cover the cost of the benefit.
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.
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.
See also information on Citizens Information Services