Items not treated as pay
Provision of bicycles for directors and employees
You may purchase a new bicycle and safety equipment up to a maximum value of €1,000 per employee. This is not a benefit in kind (BIK). Where you spend more than €1,000, the excess is treated as a BIK.
You may spend less than €1,000 in the first year but pay for additional items within the five-year period. If so the cost of the additional items is treated as a BIK.
The scheme can be applied once every five years. The year of purchase is counted as the first year.
You may agree with your employees to operate a cycle to work scheme under a salary sacrifice arrangement. The scheme is voluntary, but must be made available to all employees and directors. Home-based employees can take part in the scheme if the bicycle is used for work-related journeys.
You do not have to pay Pay Related Social Insurance (PRSI) on the cost of the equipment. Your employee will not be liable to income tax, PRSI or Universal Social Charge (USC).
Payments can be spread over 12 months under a salary sacrifice arrangement.
If your employee leaves or retires they should pay any outstanding balance before the date of leaving or retirement.
The equipment may be purchased from any cycle shop. If you purchase equipment abroad, the invoices should be in euros. Delivery charges are included as part of the cost.
You must purchase the bicycle or safety equipment. The exemption does not apply where an employee or director purchases a bicycle or safety equipment and gets reimbursed by you.
What qualifies as a journey?
For a journey to qualify the employee must:
- use the bicycle for all or part of the journey to and from work
- state in writing that the bicycle is for their own use and will be used for work.
You are not required to monitor the use of the bicycle.
Qualifying bicycles and safety equipment
The following bicycles and equipment can qualify for this scheme:
- pedal bicycles and tricycles
- pedelecs (electrically assisted bicycle that requires some effort to propel)
- cycle helmets covered under European standard EN 1078
- bells and bulb horns
- lights, including dynamo packs
- mirrors and mudguards
- cycle clips and dress guards
- panniers, luggage carriers and straps
- locks and chains
- pumps and puncture repair kits
- reflective clothing and bicycle reflectors
- safety equipment.
The following items are not allowed:
- mopeds or scooters
- second-hand bicycles or equipment
- bicycle parts or associated equipment.
Value-Added Tax (VAT) on bicycles or safety equipment purchased
You must pay VAT on bicycles or safety equipment purchased for your employees. You cannot claim VAT back as the equipment is not used for the purposes of taxable supplies.
All records in relation to this scheme can be examined by Revenue as part of normal inspections.
Failing to operate the scheme correctly will result in the benefits being withdrawn from both you and your employee.
The following reasons are considered as incorrect operation of the scheme:
- allowing your employee to avail of the scheme more than once every five years
- allowing your employee to exceed the maximum limit of €1,000
- facilitating the purchase of anything other than items covered by the scheme.
False invoices received for non-allowable items may result in a €3,000 penalty being imposed on the employee or the retailer.