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Know Your Rights has been compiled by Kerry Citizens Information Service which provides a free and confidential service to the public…
If you are planning to embrace a fitter lifestyle in 2024, you may wish to consider parking the car and cycling to work instead.
The Cycle to Work Scheme is a tax incentive scheme to encourage employees to cycle to work. Under the scheme, an employer can pay for a new bicycle (including bicycle accessories) and the employee then repays the cost in regular instalments from their gross salary. You are not liable for tax, PRSI or the Universal Social Charge on your repayments.
Your employer does not have to take part in the scheme. However, if they do, they must offer it to all their employees.
If you are self-employed, you are not entitled to avail of the Cycle to Work Scheme unless you pay PRSI as an employee in addition to your self-employed work.
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How do I buy a bike under the Cycle to Work Scheme?
You should ask your employer if they run the scheme and check their requirements. They may allow you to select the bicycle and equipment from any shop or only certain bicycles from specific shops.
You can choose your bike by visiting a bike shop and selecting the bike and equipment that you want to buy. Next, tell your employer of this choice. The employer will then pay the bike shop or supplier for the bike and equipment directly.
It’s important to note that your employer cannot reimburse you if you make the payment. The tax exemption does not apply if you pay for the bicycle and your employer reimburses you.
You must sign a written agreement stating that the bike is for your own use, and you will use it for what the Revenue Commissioners consider qualifying journeys: getting to and from work.
Your employer then 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 your salary arrangements.
How do I save money on the Cycle to Work Scheme?
As an employee you save on the costs of cycling to work because your repayments come out of your salary before tax, USC and PRSI are deducted. This means that someone on the highest rate of tax will save almost half of the cost of a new bike and equipment.
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How much can I spend on the Cycle to Work Scheme, and how often can I use it?
Currently, there are 3 limits depending on the type of bike you bought. The limit (including related safety equipment) is:
€3,000 for cargo and e-cargo bikes.
€1,500 for pedelecs and e-bikes.
€1,250 for other bicycles.
How frequently can I avail of the scheme?
As an employee, you can use the scheme once every 4 years. The four-year span between tax breaks is counted by tax year. If you bought a bike in 2020, regardless of the month, you could buy a new bike and avail of the next tax relief in January 2024.
What equipment does the Cycle to Work Scheme cover?
The scheme covers the following items, which must be bought as new (not second-hand):
• New bikes and pedelecs (electrically assisted bikes that require some effort to propel)
• Cycle helmets
• Bells and bulb horns
• Lights (including dynamo packs)
• Mirrors
• Mudguards and skirt guards
• Cycle clips
• Panniers, luggage carriers and straps
• Locks and chains
• Pumps
• Puncture repair kits, cycle tool kits and tyre sealant
• Reflective clothing
• Bike reflectors
The scheme does not include motorbikes, mopeds, scooters or second-hand bicycles or equipment or bicycle parts or associated equipment.
What if my employer buys me a bike and doesn’t charge me for it?
That is acceptable and under the scheme, you will not be taxed for benefit in kind if you receive a bike from your employer as long as the cost of the bike and equipment does not exceed a total of €1,250, or €1,500 for pedelecs or an e-bike or €3,000 for a cargo or ecargo bike.
• For anyone needing information, advice or have an advocacy issue, you can call a member of the local Citizens Information team in Kerry on 0818 07 7860, they will be happy to assist and make an appointment if necessary.
The offices are staffed from Monday to Friday from 10am to 4pm. Alternatively you can email on tralee@citinfo.ie or log on to www.citizensinformation.ie for further information.
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