Bike to Work Scheme

Introduction

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 fortax, PRSI or the Universal Social Charge (USC)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.

Rules

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 at 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 regular new (not used) bikes and equipment up to the value of €1,250 and for pedelecs or 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 2018, regardless of the month, you could buy a new bike and avail of the next tax relief in January 2022.

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 pedelecs (electrically-assisted bikes that require some effort to propel)
• Cycle helmets
• Bells and bulb horns
• Lights (including dynamo packs)
• Mirrors
• Mudguards and skirt guards
• Cycle clips
• Panniers, luggage carriers and straps
• Locks and chains
• Pumps
• Puncture repair kits, cycle tool kits and tyre sealant
• Reflective clothing
• Bike reflectors

The scheme does not include motorbikes, mopeds, scooters, second-hand bicycles, equipment, bicycle parts, or associated equipment.

How do I buy a bike under the Bike to Work Scheme?

You should ask your employer if they operate the scheme and check their requirements. They may allow you to select the bicycle and equipment from any shop or only certain bicycles from specific shops. If you are a civil or public servant, the cycle shop must be on the Office for Government Procurement approved supplier list. The Spin Doctor is on this list.

You can choose your bike by visiting a bike shop and selecting the bike and equipment that you want to buy. Next, tell your employer about 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 says I must purchase the bike through a third party, or voucher scheme company?

Despite the fact that the cycle to work scheme is uncomplicated, some employers (usually large organisations) may use a third-party company (sometimes known as a voucher scheme) to process the cycle to work paperwork. The employee will choose a bike from a scheme approved supplier and submit the details of the bike they want through a scheme application form.

Once approved, the employee will receive a code (or voucher) which can beexchanged for the bike with the shop. The bike shop will be charged a commission(typically approx 10%) when they redeem the voucher with the scheme for payment.

The Spin Doctor is approved for working with all of the voucher schemes available in Ireland.

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.