More and more people are saying that they will cycle to work, primarily because of the health crisis. While using bicycles can get people where they intend to go, there are also innumerable benefits the activity can give those who take up the initiative.
Irish government initiative
To encourage more people to use bicycles to commute to and from work, the Irish government introduced the Cycle to Work Scheme in 2009. The initiative aims to promote healthier travel to work, and at the same time, reduce pollution. The scheme, known as Bike to Work in Ireland, lets employers loan bicycles, including the required safety equipment, to employees tax-free. The employees will then pay their employers a monthly fee to use the bike for one year.
Participation in the scheme is voluntary. Therefore, employees should first check with their employers. If the employer participates in the plan, it can either allow the employees to choose the bicycle they want or specify which type they allow.
The previous limit was €1,000 for all types of bicycles and safety equipment. According to the latest guidelines, an employee can have a regular bicycle and safety equipment for up to €1,250. On the other hand, employees have up to €1,500 if they want to have an e-bike or pedelec and the required safety equipment.
Employees in private companies can buy the bicycle from any shop, but employees from public offices should only purchase a bike from a shop included in the suppliers’ list available from the Office of Government Procurement (OGP) website.
Bicycle and equipment included in the scheme
Only new bicycles and e-bikes are allowed in the scheme. It will not cover mopeds, scooters, motorbikes, second-hand bikes, bicycle parts and related equipment. The bike and the safety equipment should be purchased simultaneously from one shop only.
Paying for the bicycle
When you apply for the scheme, you enter a salary sacrifice agreement with your employer. The employer will deduct an agreed amount from your gross salary tax-free. From the balance of your paycheck, you will pay your income tax (IT), Universal Social Charge (USC), and Pay Related Social Insurance (PRSI). You and your employer can agree on the payment period, but it should not exceed 12 months.
If your employer does not charge you for the bike and equipment, you can still get a tax exemption from the cost of the bicycle for up to €1,250 for a standard bike and €1,500 if your employer gives you an e-bike or a pedelec. But if the cost of the bicycle is more than the ceiling amount, your employer will apply the excess amount to your IT, USC, and PRSE.
Frequency of using the scheme
The hire period under the scheme lasts for one year. After its expiration, you can return the bicycle and equipment to your employer. You can also re-hire the bike for an agreed amount or buy the bike from your employer at a much lower price than what you will pay when you buy the bike from a shop.
In Ireland, you can avail yourself of the Cycle to Work scheme every four years.