Are you looking to get fit, save money, and help the environment?
The Cycle to Work Scheme might be just what you need!
This fantastic initiative encourages employees to cycle to work by offering tax incentives on the purchase of bicycles and safety equipment.
Here’s everything you need to know about the scheme in a simple and easy-to-understand format.
What is the Cycle to Work Scheme?
The Cycle to Work Scheme is a government initiative that allows employees to buy a new bicycle and safety equipment tax-free. This means you can save up to 52% on the cost of a new bike and accessories, depending on your tax bracket.
How Does It Work?
Choose Your Bike and Equipment:
Select a new bicycle and any necessary safety equipment (like helmets, lights, and locks) from a participating retailer.
Employer Purchase:
Your employer buys the bike and equipment on your behalf.
Salary Sacrifice:
The cost of the bike is deducted from your salary over a period of up to 12 months. This is known as a salary sacrifice arrangement.
Tax Savings:
Because the cost is deducted from your gross salary (before tax), you save on income tax, PRSI, and USC.
Key Points to Remember
Eligibility: The scheme is available to all employees, including directors, provided the employer offers the scheme.
Frequency: You can avail of the scheme once every four years.
Qualifying Journeys: The bike must be used mainly for commuting to and from work or for work-related journeys.
New Equipment: Only new bicycles and safety equipment qualify for the scheme.
General Availability: The scheme must be made available to all employees, not just selected individuals.
Benefits of the Cycle to Work Scheme
Cost Savings:
Save up to 52% on the cost of a new bike and accessories.
Health Benefits:
Cycling to work is a great way to incorporate exercise into your daily routine, improving your overall health and fitness.
Environmental Impact:
Reduce your carbon footprint by choosing a greener mode of transport.
Convenience:
Avoid traffic jams and parking issues by cycling to work.
Example Calculation
Let’s say you choose a bike and equipment worth €1,000. If you’re in the higher tax bracket (52%), your savings could look like this:
Cost of Bike and Equipment: €1,000
Tax Savings (52%): €520
Net Cost to You: €480
How to Get Started
Check with Your Employer:
Confirm that your employer offers the Cycle to Work Scheme.
Choose Your Bike:
Visit a participating retailer and select your bike and equipment.
Complete the Paperwork:
Fill out any necessary forms provided by your employer.
Start Cycling:
Once everything is approved, you can start enjoying your new bike and the benefits of cycling to work!
Conclusion
The Cycle to Work Scheme is a win-win for everyone. It promotes a healthier lifestyle, saves you money, and helps the environment. If you’re considering a new way to commute, why not give cycling a try? (Please note, this scheme is not available to Self Employed individuals).
Alan is a Chartered Accountant and Tax Adviser and the founder of CloudAccounts, a remote practice that provides support for business owners, PAYE workers and anyone who requires professional assistance with their tax and accounting matters.
Alan also offers consultations and corporate seminars, to offer businesses and their employees' simple practical advice in easy-to-understand presentations, allowing employees to feel valued, supported and make the most of the company benefits. If you require further information please contact CloudAccounts today.
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