Want to know your bike-to-work scheme eligibility? This article explains who can join and how to benefit from this government initiative.
Introduction to the Bike to Work Scheme
The Bike to Work Scheme in Ireland makes cycling to work more affordable. It lets employees buy a brand new bike and safety equipment through their employer via salary sacrifice, with repayments deducted from gross salary before tax, USC, and PRSI. The cycle to work scheme covers new bicycles—including cargo and electrically assisted bikes (electric bikes)—and essential safety gear like helmets, lights, and locks. It promotes sustainable commuting, healthier lifestyles, and less traffic congestion.
Key Points
- Open to salaried employees, self-employed paying PRSI, and home-based employees with work-related trips.
- Civil or public servants may need to buy from approved suppliers.
- Tax relief applies once every four years based on the tax year.
- Participation depends on employer involvement and is voluntary.
- Spending limits: €3,000 for cargo bikes, €1,500 for e-bikes, €1,250 for regular bikes.
- You must maintain and insure your bike; the agreement is non-cancellable; outstanding balances are deducted from your final paycheck if employment ends early.
Who Can Join?
Your employer must voluntarily participate in the cycle to work scheme. Eligible participants include salaried employees paying PAYE tax, self-employed individuals who also pay PRSI as employees, and home-based employees who use the bike for work-related journeys. Civil or public servants must purchase their bike and equipment from employer-approved suppliers. Employees can avail of the scheme once every four years, and participation depends on whether the employer offers the scheme to all employees.
Qualifying Journeys
The scheme covers commuting journeys between your home and your normal workplace, including trips to train stations. While leisure rides are permitted, they should not be the primary use of the bike under this scheme. The initiative supports reducing carbon footprints and promotes sustainable transport options for daily travel.
Bikes and Safety Equipment Covered
Eligible purchases include new bicycles such as pedelecs, cargo bikes, and e-cargo bikes from approved cycle shops. The cycle to work scheme covers a range of bicycle and safety equipment, including cycle helmets, lights, locks, reflective clothing, puncture repair kits, cycle tool kits, luggage carriers with straps, and rain gear. However, second-hand bicycles, bicycle parts such as chains and saddles, and child seats are excluded from the scheme.
Financial Limits and Tax Exemptions
Understanding the financial limits and tax benefits of the scheme will help you maximise your savings. The cycle to work scheme offers relief on purchases up to €3,000 for cargo and ecargo bikes, €1,500 for pedelecs and e-bikes and €1,250 for regular bicycles.
Costs above these limits are taxable. Tax exemption applies only when your employer pays the supplier directly and repayments are deducted from your salary before tax, USC and PRSI. If the employee pays for the bike and the employer reimburses them, tax exemption does not apply. You can only receive the next tax relief or tax breaks once every four years, calculated based on the tax year.
How to Apply for the Bike to Work Scheme
Applying for the scheme starts with verifying if your employer participates and what their specific requirements are. Once you confirm your employer participates, choose your bike and cycle-related equipment, then inform your employer who will pay the supplier directly.
Finally, sign a written agreement with your employer confirming the bike will be mainly used for commuting, formalising your participation and ensuring you comply with the scheme’s terms.
Following these steps will make the application process smooth, and you can start enjoying the scheme’s benefits.
Payment and Salary Sacrifice Arrangements
The payment process under the scheme is straightforward and cost-effective. Employees receive a bicycle and safety equipment as a non-cash benefit. Your employer pays the cycle shop directly, and repayments are deducted from your salary over an agreed period, usually up to 12 months.
These repayments reduce your taxable income, saving you tax, PRSI, and USC. Pension contributions are generally based on your full salary, but check with the HR department for specifics regarding how these deductions might affect your benefits.
How This Arrangement Affects Your Benefits
By reducing your gross salary in exchange for a new bike and safety equipment, you can save up to 52% by lowering your income tax, PRSI, and USC. Pension contributions remain based on your full salary, so pension benefits are unaffected, but some state benefits like Jobseeker’s or Illness Benefit might be impacted.
Consult your HR department or a financial advisor before joining to understand how these salary deductions affect your situation and maximise your scheme benefits.
Payback Period: What to Expect
When you join the scheme, this is usually up to 12 months with repayments deducted from your gross salary – weekly, fortnightly or monthly, depending on your pay schedule.
You are responsible for the full cost of the bicycle and safety equipment. If you leave your job or are made redundant before paying in full, any outstanding balance will be deducted from your final salary payment.
Knowing the repayment period helps you plan your finances and enjoy the scheme without surprises.
What Happens If Employment Ends Early?
If your employment ends before you’ve paid in full, any outstanding balances will be deducted from your final gross salary payment.
The purchase agreement for the bike is non-cancellable; you will need to pay the full amount even if you leave your job, to maintain the cycle to work scheme’s financial integrity. Be aware of this commitment when joining.
Leaving a job early will result in automatic deductions from your final paycheck to cover any unpaid bike scheme costs. Compliance with the non-cancellable agreement is key to a smooth transition.
Maintenance and Insurance
If you own a bike through the cycle to work scheme, you must insure it against theft or damage and understand your insurance policy. Regular maintenance is essential to keep your bike in good condition; address any issues promptly and keep repair receipts for insurance purposes.
Bike to Work Scheme Administration: How It Works
The Bike to Work Scheme lets your employer buy your chosen bike—standard, electric, cargo, or pedelec—and safety equipment for you. You repay the cost through salary sacrifice deductions over an agreed period.
Employers must offer the scheme fairly to all employees and require a signed agreement confirming the bike is mainly for commuting. They manage purchases, repayments, and compliance, making it easy for you to enjoy your new bike.
Benefits of the Bike to Work Scheme
The cycle to work scheme offers up to 52% savings on a new bike and safety equipment through tax-exempt salary sacrifice. It promotes healthier lifestyles and reduces traffic by encouraging cycling. Employees can choose from various bikes and essential cycling gear like puncture repair kits, cycle tool kits, and luggage carriers. Open to all employees, it provides long-term savings and a sustainable commute option.
Summary
The Bike to Work Scheme is a great way to save on taxes, get healthier and reduce your carbon footprint. By knowing the eligibility, qualifying journeys, related safety equipment, puncture repair kits, financial limits and application process, you can get the most out of the scheme. Start your greener commute today!
FAQs
Who is eligible for the Bike to Work Scheme?
Salaried employees who pay PAYE tax and work for employers in the scheme are eligible. Self-employed individuals are only eligible if they also pay PRSI as employees.
What types of bikes can I buy under the scheme?
You can buy new bikes, electric bikes, cargo bikes and pedelecs and associated safety equipment like helmets, lights and locks.
How do I apply for the Bike to Work Scheme?
First, verify your employer’s participation, then choose your bike and associated equipment. Inform your employer and sign a written agreement that the bike will be mainly for commuting.
What happens if I leave my job before paying for the bike?
If you leave your job before paying for the bike, any outstanding balance will be deducted from your final salary, as the purchase agreement for the bike is non-cancellable.
What are my responsibilities for maintenance and insurance?
You are responsible for insuring your bike and doing regular maintenance. Keep receipts for repairs for insurance purposes.
What are my responsibilities for maintenance and insurance?
You are responsible for insuring your bike and doing regular maintenance. Keep receipts for repairs for insurance purposes.