Items not treated as pay
Provision of bicycles for directors and employees
The Cycle to Work Scheme allows you to purchase new bicycles and safety equipment for your employees. Items purchased under the scheme are not a taxable benefit-in-kind (BIK).
Items purchased under the scheme must:
- be made available to all employees and directors
- be used for qualifying journeys
- cost no more than €1,500 per employee for an electric bike or €1,250 for other bicycles (any excess is a BIK)
- from 1 January 2023 cargo bikes which cost no more than €3,000 are included in the cycle-to-work scheme
- be purchased by you (the exemption does not apply where an employee or director is reimbursed).
You can only avail of the scheme once every four years. If you spend less than the relevant limit on an employee in a year, you cannot make up the difference in the remaining three years. Bicycles and safety equipment purchased in these years are BIK regardless of cost. The tax year in which the bicycle is provided counts as the first year.
You may agree with your employees to operate the scheme using a salary sacrifice arrangement. Payments can be spread over 12 months under this arrangement.
Home-based employees can take part in the scheme if the bicycle is used for work-related journeys. 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 must be in euros. Delivery charges are included as part of the cost.
What is a qualifying 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)
- cargo bikes and e-cargo bikes
- 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
- other 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.