National Bike Week is a celebration and promotion of all that’s great about bikes and cycling, and as it draws to a close for 2015, you can make sure you’re ahead of the curve for next year by taking part in the Cycle to Work Scheme. A tax incentive scheme available to all employees who wish to cycle to work.
Under the scheme, employers can pay for bicycles and bicycle equipment for their employees and the employee pays back through a salary sacrifice arrangement of up to 12 months. The employee is not liable for tax, PRSI or the Universal Social Charge on their repayments.
What equipment does the scheme apply to?
The scheme applies to new bicycles and pedelecs but does not cover motorbikes, scooters or mopeds.
Purchase of the following new safety equipment is also covered:
– Cycle helmets which conform to European standard EN 1078
– Bells and bulb horns
– Lights, including dynamo packs
– Mirrors and mudguards to ensure that the rider’s visibility is not impaired
– Cycle clips and dress guards
– Panniers, luggage carriers and straps to allow luggage to be safely carried
– Locks and chains to ensure cycle can be safely secured
– Pumps, puncture repair kits, cycle tool kits and tyre sealant to allow for minor repairs
– Reflective clothing along with white front reflectors and spoke reflectors
How do I pay for the bicycle?
Usually, your employer pays the supplier for the bicycle and sets up a ‘salary sacrifice’ arrangement from your salary over an agreed time frame (which cannot be more than 12 months). This means that you visit the shop, select the equipment you wish to buy and have the shop invoice your employer directly for the cost. Note that the tax exemption does not apply if you pay for the bicycle and are reimbursed by your employer – they must pay for the bicycle.
The repayment for the bicycle and equipment is then deducted from your gross salary (this means before income tax, PRSI, pension levies or Universal Social Charge are deducted). These deductions can be made weekly, fortnightly or monthly depending on your salary payment arrangement. Your employer can also buy the bicycle on your behalf and not require you to pay for it.
You can only avail of the scheme once in a five-year period. This applies even if you do not purchase equipment up to the €1,000 limit.
You must use the bicycle and safety equipment mainly for qualifying journeys. This means the whole or part of a journey between your home and your normal place of work. Employers do not have to monitor this, but you will be asked to sign a statement saying that the bicycle is for your use and will be mainly used for qualifying journeys.
To apply ask your employer for details.
All information is sourced from Citizens Information Ireland; please visit their website for more information.