On the right track: Ireland’s Cycle to Work Scheme

The Cycle to Work Scheme has become an increasingly popular initiative, encouraging a healthier and more sustainable lifestyle while also offering significant savings on commuting costs. This scheme offers significant benefits to both employers and employees. For employers, offering and supporting this scheme is a wonderful way to foster positive sentiment at work, and can form an important element of the rewards package. Keeping a competitive and comprehensive rewards package is imperative when it comes to attracting and retaining top talent.  

Availing of the Cycle to Work Scheme offers a practical solution for employees who want to integrate cycling into their daily routine, particularly as urban areas are expanding and the demand for eco-friendly transportation options becomes more urgent. Whether you’re an avid cyclist or just starting to consider biking to work, this guide will provide all the information you need to make the most of this cost-saving and environmentally friendly initiative.

 

Originally proposed in the 2008 Budget, the Cycle to Work scheme was introduced in 2009, and underwent a significant revision in 2020. The purpose of the scheme was to seek to reduce congestion in Irish cities and to support a more active lifestyle, as well as making an effort towards reducing pollution. The spending limit was increased, allowing for a maximum of €1,500 for pedelecs, €1,250 for other bicycles and €3,000 for cargo and e-cargo bikes. While you are free to spend over these limits, the excess amount of is subject to a benefit-in-kind income tax charge.  

You are also covered to also buy safety equipment including a helmet, lights, locks, and reflective clothing, making it a comprehensive option for those looking to commute by bike. 

 

There is not currently a requirement for all employers to take part in the scheme – however if a business is taking part, the scheme must be freely offered to all employees.  

So, how does it work?  

First of all, an employee must check with their employer to ensure that the scheme is available, and meet any conditions attached – i.e. select a bike from the shops approved by the employer, etc. 

When an employee has chosen their bike, they must communicate this choice to their employer. The employer   covers the cost of the bike directly, and the employee will then repay this amount through regular deductions from their gross salary.   

An employer may allow their employees to select a bike from any bicycle store, but civil and public servants must refer to the preferred supplier list. The salary deductions can be done over an agreed time, but the period can’t be any longer than 12 months. This means the employee is saving money on the bike cost as the repayments are taken before tax is deducted. The exemption allows the employee to save on the income tax, USC and PRSI that would normally be payable on the value of a qualifying purchase.  

 

It has been established that by availing of the Cycle to Work scheme, up to 52% can be saved on a bicycle and its safety accessories. The average saving ranges between 28.5-48.5%. Those in the higher tax bracket will save almost half of the cost of a new bike and equipment.  

To take part in the scheme, employees must sign a written agreement stating that the bike is for their own use and will be used primarily for getting to and from work. 

For self-employed people, the same requirements do not apply. They are not able to avail of this scheme as they do not receive a salary from an employer.  

If the self-employed individual pays PRSI as an employee as well as their self-employed work, then they can avail of the Cycle to Work Scheme. 

See also: Employee Benefits in Ireland: From SME to Enterprise | SD Worx 

 

The Cycle to Work Scheme will have an impact on many of the longer-term goals set in place for Ireland. The Climate Action Plan of 2024 draws attention to CycleConnects, which will be delivered by the NTA and the relevant local authorities. Work is set to take place to ensure links are built and maintained between the intra-urban and inter-urban cycling plans. With an expanded range of e-bikes set to become available, this will provide the high-quality network that supports the use of cycling, e-bikes and e-cargo bikes as viable alternatives to the use of private cars. This is great news for anyone hoping to avail of the Cycle to Work scheme, with improved cycle lanes for safer routes to and from work. These improvements to cycling infrastructure could also lead to an uptake in people availing of the scheme and continuing to cycle beyond their journeys to and from work. 

 

As this scheme pre-dates the pandemic, work culture has gone through significant changes which may give rise to questions regarding the eligibility of the scheme as time passes. 

The intention around the Cycle to Work scheme is clear – but there is flexibility built into the programme. The main intended use of your bike needs to be for work, but there is no set number of days for travel, and no record required for your trips. It’s possible to use the bike for leisure in your free time, too. For remote workers, if your company offers to support the scheme, Revenue states that home-based employees can take part in the scheme if the bicycle is used for work-related journeys. 

 

There is a lot for employers to balance regarding employee benefits. However, implementing the Cycle to Work Scheme from an employer's perspective is generally straightforward. While Employers must initially cover the cost of the bike, they recoup this through salary deductions and adjust payroll to reflect the salary sacrifice arrangement. 

The Scheme offers an excellent opportunity for both employees and employers to support a healthier, more sustainable lifestyle while reducing commuting costs. For employees, it provides a cost-effective way to invest in a bicycle and necessary safety equipment, with significant tax savings. For employers, offering this benefit can increase employee satisfaction, support attraction of talent as well as offering reputational benefits aligning with demands for environmentally conscious workplaces that promote health and well-being. 

SD Worx can seamlessly support the implementation of the Cycle to Work Scheme, handling the salary sacrifice adjustments and simplifying the entire process. With our solutions, you can easily manage the scheme with minimal administrative effort, ensuring compliance and efficiency. 

Let us help you make offering this valuable benefit to your employees even easier, so you can focus on fostering a healthier, more sustainable workplace. 

The future of the Cycle to Work Scheme looks bright as it continues to evolve in response to growing environmental awareness and the need for healthier lifestyles. The scheme is likely to expand its reach and impact, especially with increasing urbanization and a push towards sustainable living.