Cycling to work is the perfect way to save money, stay active, and reduce your carbon footprint on the environment. And, if you are thinking of buying a brand new bike, the bike-to-work scheme is your ticket to hiring a tax-free bike from your employer.
But, you might be thinking, how does the bike-to-work scheme work exactly? Is it worth it? What type of bike can I buy under this scheme? These, and more, are the type of questions that we hope to answer with this detailed guide.
From how the scheme works to everything it provides- this guide will break down everything you need to know before applying for the bike-to-work scheme in Ireland. So, let’s get right to it!
How Does the Bike to Work Scheme Work in Ireland?
The bike-to-work scheme, also called the cycle-to-work scheme, is a government initiative to promote the use of bicycles among employees. Through this scheme, employees can purchase a bicycle and its related accessories through their employer without paying any money upfront.
Your employer pays for the bicycle and the accessories you choose. Then, the cost is deducted from your gross salary over a period of up to 12 months.
Here’s how everything happens:
1. Check With Your Employer
Before you go ahead and choose a bike, ask your employer if they offer the bike-to-work scheme. It is completely voluntary so there is a chance that your employer might not be offering the bike-to-work scheme.
If they are offering the scheme, ask the e-bike retailer for an invoice. You can then submit this invoice to your employer.
This is also the time to agree on a payment period. You can choose to split payments for up to 12 months.
2. Choose Your Bike & Accessories
The next step is to choose the bicycle and any accessories that you think you might need when riding to and from work. We’ll discuss these in detail in a later section.
Below is the spending cap on the bike-to-work scheme in Ireland:
- €1250 for a regular bicycle
- €1500 for an e-bike/pedelec
- €3000 for cargo and e-cargo bikes
The cost of both - the bike and its accessories - should stay within the spending cap. If your purchase exceeds the spending cap, you will have to pay the difference out of your own pocket.
For example, the scheme only covers the purchase of an e-bike + accessories for up to €1500. But, if your final bill comes up to €1800, you’ll have to pay the remaining €300 yourself.
3. Employer Pays the Retailer & Salary Deductions Begin
Once everything is decided, your employer pays for the bike and accessories directly to the retailer. You - the employee - don’t have to pay anything upfront. Your employer will automatically deduct the agreed-upon amount from your gross salary every month. These arrangements can vary depending on your salary payment schedule.
This deduction happens from your gross salary - before income tax, Universal Social Charge, and PRSI are deducted - which reduces your taxable income and helps you save up to 52% of the total cost of the bike and the accessories.
Things Covered by the Bike to Work Scheme
Now that you have a basic understanding of how the bike-to-work scheme works, let’s see what you can and can’t buy under the scheme.
First and foremost, the bike-to-work scheme in Ireland only covers new bikes and accessories. You can not buy used/second-hand kits using the scheme. Secondly, the scheme only allows the purchase of bicycles, electric bikes, and cargo bikes. You may choose any type of bicycle as long as you can use it for your daily work commutes.
As for the accessories, below is a list of all accessories that you can purchase using the bike-to-work scheme:
- Bells/Horns
- Lights
- Mirrors
- Mudguards
- Bike reflectors
- Reflective clothing
- Bicycle Helmets
- Bicycle Clips
- Panniers and Luggage Carriers
- Bicycle Locks and Chains
- Puncture Repair Kits
- Tyre Pumps
- Tyre Sealant
Accessories like child seats, trailers, and child helmets are not covered by the bike-to-work scheme. Moreover, you cannot buy motorbikes, mopeds, or scooters using the bike-to-work scheme in Ireland.
Other Technicalities to Consider
Below are some technicalities of the bike-to-work scheme that you must be aware of before applying:
- You can only use the scheme once every four years, regardless of whether you switch employers. This means that if you purchased a bike through the bike-to-work scheme in January 2024, you will not be eligible again until January 2028, even if you change jobs.
- If you leave your job before full repayment, the employer can deduct the remaining amount from your final paycheck or request an upfront payment.
- You will have to sign a written agreement that you will be the sole user of the bike and the bike should primarily be used for getting to and from work.
Conclusion
Hopefully, that answers all your “how does the bike-to-work scheme work” questions.
With fuel prices on the rise, this is the best time to leverage the cycle-to-work scheme and start using a bike for commuting to and from work. Just make sure you consider all the technicalities and their implications before opting to buy a bike through your employer.