Changes announced to the popular Cycle to Work scheme as part of the July Stimulus package.

Increased allowance for electric and pedal bikes.

An increased allowable expenditure under the scheme from €1,000 to €1,500 in respect of “ebikes,” and €1,250 in respect of other bicycles.

Previously the ceiling for all bike purchases was at €1,000.

Eligibility Criteria for Cycle to Work scheme

Employers in Ireland are under no obligation to participate in the cycle to work scheme, though if they choose to it must be offered to all employees. Employees can participate once every five years, gaining access to tax relief on bikes and accessories, potentially saving up to 51%. Though the scheme includes electric bikes, it does not offer conversion kits.

How it works

• Check if your employer operates the scheme.
• Employee goes to a bike shop and selects the bike and safety equipment.
• The employee informs their employer of this choice.
• The employer will then pay the bike shop or supplier for the bike and equipment directly.
• If the employee pays directly they cannot be reimbursed by the employer.
• The employee must sign a written agreement stating that the bike is for their own use and you will use it for what the Revenue Commissioners consider qualifying journeys: getting to and from work.
• The employer 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 salary arrangements.
• Employee may apply every 4 years.

Tax Treatment

The employer can arrange a ‘salary sacrifice’ over an agreed time, which cannot be for more than 12 months.

In this arrangement the employee gives up an agreed amount of your gross salary to cover the cost of the bicycle. You only pay Income Tax (IT), Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on the balance of your salary.

This means that the employee saves up to half of the retail price of bike and equipment, and the employer also makes a saving on employers’ PRSI for each application.

The cost of the bicycle may be more than €1,250 or in the case of a pedelec or ebike, €1,500. If this is the case IT, USC and PRSI will apply to the balance in excess of these amounts.

Full details available on revenue.ie