For Anyone who has Missed the Amended Cycle to Work Scheme
The Government Cycle to Work Scheme is encouraging people to cycle to and from their workplace. An employer can buy an employee a bicycle and equipment and this will not be a taxable benefit in kind. Prior to August 1st, 2020 the limit for all bicycle and safety equipment was €1,000. This has now been increased to €1,250 for a bicycle and €1,500 for an e-bike. These amounts include related safety equipment and the purchase can be made in any shop. However, if you are a public or civil servant, the cycle shop must be included on the supplier’s list which is available from Revenue.
Are all Bikes Included on the Scheme?
The scheme does not cover the following:
What Safety Equipment is Covered Under the Scheme?
How does Payment Work?
A salary sacrifice over an agreed time frame is arranged with your employer but cannot be greater than twelve months long. An agreed amount of the employee’s gross salary is given up to cover the cost of the bicycle. The employee only pays Income Tax, USC and PRSI on the balance of the salary.
In the case of the employer purchasing the bicycle for the employee, the employee will be exempt from tax on this benefit of €1,250 or €1,500 for an e-bike. If the cost of the bicycle is greater than €1,250 or €1,500 for an e-bike, Income Tax, PRSI and USC will apply to the balance in excess of these amounts. The employer will request the employee to sign a statement ensuring that the bicycle is solely for the employee’s use and will be used for the qualifying journeys, ie. whole or part of the journey is between home and the normal place of work.
The scheme can be availed of once every four years where the tax year in which the bike is provided is regarded as the first year. Previously, the Bike to Work Scheme was available every five years. If an employee has availed of the scheme prior to August 1, 2020, he or she may not avail of the amended scheme until the four year period has expired. There is no limit to the number of times a person can avail of the scheme.
The pandemic has brought a significant increase in cycling as more people took up cycling to work in an attempt to avoid public transport. This has resulted in a surge of bicycle sales. These amendments to the scheme form part of the wider stimulus package for the economy due to the pandemic.