🚴♂️ Home Cycle to Work Scheme
About the Cycle to Work Scheme
The Cycle to Work Scheme, introduced in 2009, encourages employees to cycle to and from work by offering significant savings on the cost of bicycles and related accessories. The scheme allows employees to save up to 50% on the retail price through tax relief—depending on their tax rate—and is simple to access, provided your employer offers it.
In August 2020, the scheme was updated:
For example, a bike and accessories with a retail value of €500 may cost only €250 after tax savings.
Employers also benefit, as operating the scheme reduces their PRSI contributions.
Frequently Asked Questions (FAQs)
🧾 What is the Cycle to Work Scheme?
It's agovernment initiativethat enables employers to purchase a bicycle and accessories on behalf of an employeewithout benefit-in-kind (BIK) tax liability. For higher-rate taxpayers, this can meansavings of up to 51%.
🎯 What is the purpose of the scheme?
To encourage employees to:
🔐 What equipment is covered?
In addition to the bicycle, the scheme covers:
Helmets
Lights, locks, bells, mirrors
Cycle clips, panniers, luggage carriers & straps
Pumps, puncture repair kits, tool kits
Reflective clothing and reflectors
💶 Is there a spending limit?
Yes:
€1,250for standard bicycles
€1,500for electric bikes
€3,000for cargo bikes
Spending above these amounts is subject toBenefit-in-Kind (BIK) tax.
🧑💼 Does my employer have to offer the scheme?
No, it’svoluntary. However, if an employer chooses to offer it, itmust be available to all employees equally.
💳 Who pays for the bicycle?
Theemployer purchasesthe bike. This can be:
🧾 How does salary sacrifice work?
You agree tosacrifice a portion of your salary(weekly, fortnightly, or monthly) for up to12 monthsto cover the cost of the bike and accessories. This portion is:
Exempt from tax, employee PRSI, and income levies
Exempt from employer PRSI
This results in significant savings for both employee and employer.
🎓 Can students avail of the scheme?
No, it is only open toemployees and company directors.
🛒 Do I choose the bike and accessories myself?
It depends on your employer. Some allow you to choose from any retailer, while others may limit options to a specific supplier.
🔁 Can I buy the bike myself and get reimbursed?
No. Theemployer must purchasethe bicycle and accessories directly.
⏳ Why can’t I get a new bike more than once every 4 years?
The scheme allows tax relief onlyonce every four years, which reflects the expected lifespan of a typical bicycle.
🔄 If I change employers, does the 4-year rule reset?
No. The4-year cycle applies to you as an individual, regardless of your employer.
🚴♂️ Do I have to use the bike a certain number of days?
No minimum is enforced, but the bike must be usedmainly for commuting to/from work or between workplaces.
🤝 Who owns the bike during salary sacrifice?
Even during the 12-month salary sacrifice period, theemployee owns the bikeonce a signed agreement is in place. If the employer fully pays for the bike, ownership also transfers to the employee.
⚡ Are electric bikes covered?
Yes. Eligibleelectric bikes ("pedelecs")must:
Limits:
For Employers: How to Offer the Scheme
Implementing the Cycle to Work Scheme isstraightforwardand requiresno involvement from Revenue or third-party providers.
🔧 Steps:
Employee selectsa bike and accessories (within limits).
Shop issues invoice(must show VAT separately).
Employer paysthe shop directly.
Employee signs salary deduction agreement.
Set up deductionfrom gross pay (similar to pension deductions) over max12 months.
Do NOT reclaim VAT, as bikes aren’t business supplies.
Employee repays full cost (including VAT) through payroll deductions.
Employer recoups full cost through repayments and benefits from reduced PRSI.
💡 By purchasing directly from bike shops, employees benefit ascash customers. Avoiding third-party voucher companies prevents commission deductions and gives better value.