Interested in the bike to work scheme? These schemes can save you money, improve your health, and help the environment. Find out how the bike to work scheme can benefit you and see all the benefits of the bike to work scheme that will make your daily commute better.
What is the Scheme
The Cycle to Work Scheme is a smart, government-backed work scheme cycle that makes cycling to work easier and more affordable. Here’s how it works: your employer buys the bike and bicycle equipment, including safety gear you need, and you repay them through convenient, pre-tax salary sacrifice payments—meaning you save money by reducing your taxable income. Open to all their employees, including self-employed individuals who pay PRSI as employees, the scheme can be used once every four years. By joining, you not only get great tax relief and savings but also help reduce traffic congestion and boost your health and wellbeing. It’s a win-win for you, your employer, and the environment.
Key Points
- The bike to work scheme offers significant tax savings; you repay for the bike through tax-exempt salary deductions, allowing you to save up to 52% on bike costs.
- Cycling enhances your health and productivity by lowering the risk of serious health conditions and improving mental wellbeing, focus, and engagement at work.
- The scheme promotes corporate social responsibility by encouraging sustainable commuting, enhancing company reputation, and fostering a culture of health and environmental awareness among employees.
Eligibility Criteria
To participate in the cycle to work scheme, you must have an employer who will take part in the scheme. The employer buys the bike and cycle-related equipment, and the employee must sign a written agreement stating that the bike will be used for own use on qualifying journeys such as commuting to and from work. The scheme only applies to new bicycles and safety equipment, so you get high-quality, reliable gear. Second-hand bicycles, motorbikes, mopeds, scooters, and electric-bike conversion kits are not eligible. You can choose your own bike and safety equipment from any bike shop, so you have flexibility and choice. However, civil or public servants must choose from an approved list of suppliers as required by the revenue commissioners. The scheme covers a wide range of options, including electrically assisted bicycles like pedelecs and e-bikes to suit different commuting needs.
Tax Relief, Savings and Financial Benefits
Participating in the bike to work scheme gives you:
- You avoid tax, PRSI, and USC when you repay the cost of your bike through the programme.
- That means big financial relief.
- The exemption reduces taxable income.
- It effectively reduces income tax owed, and you pay income tax and PRSI on the reduced amount.
The scheme operates through a salary sacrifice arrangement with the following features:
- The employer pays for the bike upfront. The employer pays for the bike and equipment directly to the supplier or bike shop, so the payment process is straightforward.
- You repay the amount through regular deductions from your gross salary before tax.
- These repayments are made before tax, so the bike is a non-cash benefit with tax-free advantages. Employees in the highest tax brackets can save almost half the cost of a new bike and safety equipment, which can also impact their overall financial situation through these pre-tax deductions.
- Employees enter into a purchase agreement that is non-cancellable and outlines the financial settlement process if the employee leaves before completing payments.
Employees can save up to 52% of the bicycle’s cost under this programme. Key details are:
- Maximum value allowed is €1,250 for standard bicycles and related safety equipment including lights including dynamo packs, straps, locks, and luggage carriers.
- Maximum value allowed is up to €1,500 for e-bikes and safety equipment.
- Tax exemption only applies if the employer buys the bike.
- Repayment period is usually 12 months.
- That means manageable repayments without impacting the final gross salary payment.
Eligibility for the scheme is based on the tax year in which the bicycle was first provided, and the count of years provided determines when an employee can use the scheme again. The scheme can be used once every 4 years, and the next tax relief becomes available after 4 years from the purchase date and the tax year.
Overall, the financial benefits make this a great option for employees who want tax breaks while investing in a healthier and more sustainable mode of transport.
Repayment Process
The repayment process for the cycle to work scheme is simple and flexible. You repay the cost of your bike and cycle-related equipment through deductions from your gross salary, which can be arranged on a weekly, fortnightly, or monthly basis depending on your salary arrangements. These salary sacrifice payments are taken from your gross pay before tax, USC, and PRSI are applied, so you get big savings. The maximum repayment period is 12 months, so it’s easy to manage the cost over time. Note the tax benefits only apply if the employer buys the bike; if you buy the bike and the employer reimburses you, the savings don’t apply. This structure ensures you get the full benefit of the available savings.
Health and Fitness Improvements
Cycling to work has many health benefits:
- Reduces the risk of serious conditions like stroke, heart disease, cancer, and obesity.
- Suitable for all ages, cycling is low impact and less injury prone than other exercises.
Regular cycling improves cardiovascular fitness, muscle strength, flexibility, and joint mobility. It also reduces stress and boosts productivity.
Environmental and Sustainability Benefits
Cycling reduces carbon emissions and eases urban traffic congestion, making cities greener and more livable. The Cycle to Work programme supports sustainable commuting and corporate social responsibility by promoting environmental awareness.
Improved Employee Well-Being and Productivity
Cycling helps reduce stress hormones and boosts your mood, leading to better focus at work. Employees who cycle regularly often experience higher engagement, less anxiety, and improved sleep quality, contributing to a healthier workplace overall.
Cost-Effective Commuting
Cycling to work helps you save on daily expenses by cutting fuel, parking, and public transport costs. Parking for bikes is free and more convenient, and bike maintenance is generally cheaper than maintaining a car or paying for public transport. The scheme covers new bicycles and a variety of bicycle equipment such as cycle clips, panniers, puncture repair kits, cycle tools, but excludes bicycle parts, associated equipment, and items like child seats. Since a quality bike often costs less than an annual public transport pass, cycling is a cost-effective commuting choice.
Variety of Bicycle Options
The bike to work programme covers new bicycles and related safety equipment for different commuting needs. It includes standard bikes and pedelecs (electrically assisted bicycles which require some effort from the cyclist). The maximum spend is €1,250 for standard bikes and up to €1,500 for e-bikes and safety equipment. An e-cargo bike is a pedelec-configured cargo bike designed to carry heavy loads or passengers. Eligible safety accessories include helmets, bulb horns, lights, including dynamo packs, locks, reflective clothing, and rain gear. Electric bikes must comply with regulations limiting motor power to 250W and speed to 25 kph. The scheme also covers accessories like panniers, cycle tools, and safety gear.
Supporting Corporate Social Responsibility
Encouraging employee cycling promotes health and environmental responsibility, improving workplace culture and corporate image. Companies supporting this programme demonstrate their commitment to sustainability and employee wellbeing.
Flexibility and Accessibility
The programme is open to all their employees by participating employers. It applies to qualifying journeys between home and work; employees must confirm primary use for commuting. Remote workers with work-related journeys can participate. Part-time workers are eligible, and there’s no requirement to log trips. Self-employed individuals can join only if they pay PRSI as employees.
Long-Term Investment in Employee Health
Investing in employee health through initiatives like the bike-to-work programme is a long-term strategy for business sustainability. These schemes can reduce costs associated with employee turnover. Implementing such programmes can lead to healthier employees who take fewer sick days, ultimately saving the business money. Companies that offer these benefits will see reduced absenteeism and improved employee loyalty. By promoting a healthier lifestyle, businesses can have a more productive and engaged workforce in the long run.
Safety and Maintenance
The cycle to work arrangement covers essential safety equipment like cycle helmets, bells, lights, including dynamo packs, locks, and other gear to promote safe commuting. Employees are responsible for maintaining their bicycles, including regular checks of brakes, tyres, and gears. Some employers or bike shops may offer maintenance support. Prioritising safety and maintenance ensures a reliable cycling experience.
Easy Setup and Implementation
To participate, employees should confirm if their employer offers the scheme and understand any specific requirements. The process is:
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Choose a bike at a local cycle shop.
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Inform the employer of the choice.
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The employer pays the supplier directly.
Employees repay the cost over up to 12 months via salary deductions. A written agreement stating the qualifying use is signed. Having puncture repair kits, cycle tools, and proper equipment helps maintain the bike during this period.
Employee Responsibilities
Participants must primarily use the bike for their own commuting purposes, maintain it properly, and use appropriate safety equipment. They need to notify their employer of any changes that may affect their eligibility and adhere to the spending limits (€1,250 for standard bikes and €1,500 for e-bikes). The scheme can be accessed once every four years. Understanding tax exemptions and how salary sacrifice arrangements impact pensions is important to ensure compliance and maximise benefits.
Additional Benefits and Considerations
Beyond financial and health benefits, the bike-to-work scheme offers several key advantages:
- Wide Range of Equipment: Covers bicycles plus essential gear like luggage carriers and straps, puncture repair kits, cycle helmets, bells, lights including dynamo packs, locks, and cycle tool kits for safe commuting.
- Support for Cargo and Ecargo Bikes: Includes specially designed bikes for carrying heavy loads or passengers, accommodating diverse commuting needs.
- Inclusive Participation: Available to all employees of participating employers, including part-time staff and self-employed individuals who pay PRSI as employees.
- Work-Related Journeys: Bikes must be used mainly for qualifying journeys such as commuting or other work journeys.
- Salary Sacrifice Impact: Generally does not affect pension contributions, which are calculated on full salary.
- Revenue Compliance: Requires signing a written agreement confirming bike use for qualifying journeys to ensure tax relief eligibility.
- Usage Frequency: Can be used once every four years per employee, based on the tax year.
Considering these factors helps maximise benefits while ensuring compliance and satisfaction.
Summary
The bike to work scheme offers many benefits, from tax savings and financial advantages to health and fitness improvements. It’s good for the environment, employee productivity, wellbeing, and corporate social responsibility. It’s flexible and accessible, making it an option for many employees.
By investing in initiatives like the bike-to-work scheme, companies can have a healthier, more engaged, and productive workforce. So why wait? Get cycling to work and pedal your way to a better future.
Frequently Asked Questions
How much can I save through the bike to work scheme?
You can save up to 52% of the bicycle’s cost through tax exemptions and salary sacrifice arrangements in the bike-to-work scheme. This is a significant saving. E-bikes and pedelecs (electrically assisted bicycles) are covered if they have a maximum motor power of 250 W and a top speed of 25 kph.
Can part-time employees participate?
Yes, part-time employees can participate as it’s open to all employees regardless of hours worked.
What types of bikes and equipment are covered?
The scheme covers various types of bikes and essential equipment like cycle helmets, bells, lights, including dynamo packs, locks, and reflective clothing. So you can get the gear you need to stay safe while cycling.
How do I get started?
Confirm your eligibility by checking with your employer about their specific requirements. Next, select a bike from a local bike shop and notify your employer so they can pay the supplier directly.