![\"cycle](\"https:\/\/taxback.com\/blog\/wp-content\/uploads\/2019\/07\/cycle-to-work-scheme-ireland.jpg\")
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How does the Cycle to Work scheme work?<\/h2>\n
The Cycle to Work scheme allows employers to purchase new bikes and bicycle safety equipment for their employees. These items are not a taxable benefit-in-kind (BIK) like say, a gym membership or a gift card. Read more about paying tax on your BIK gym membership here<\/a>.<\/p>\n Of course, like any work related benefits, there are some rules that apply to employers and employees if they wish to partake in this scheme.<\/p>\n These rules are as follows:<\/strong><\/p>\n Now that we have those pesky rules out of the way, let\u2019s look at some common questions about the scheme\u2026<\/p>\n Well, besides the obvious health and environmental benefits, there is a tax incentive that you could be taking advantage of. If you choose a salary sacrifice arrangement with your employer, you can pay for the bike and\/or equipment by allowing your employer to deduct the cost from your pay check for 12 months until you have paid off the bike. A salary sacrifice cannot be agreed upon for a time period of longer than 12 months.<\/p>\n Your employer will deduct the money before it reaches your bank account, meaning your taxable income is reduced. Since the deduction is made from your gross salary, it won\u2019t be subject to income tax, PRSI, pension levies or USC.<\/p>\n And you know what that means\u2026<\/p>\n You PAY LESS TAX.<\/p>\n Not only can you get a bike without having to pay for it upfront, you\u2019ll also be taxed less each week or month.<\/p>\n The most common scenario is the employer pays the supplier for the bike. They will then set up the salary sacrifice agreement. In most cases you\u2019ll go to a bike shop, browse the bikes and choose the perfect one for you. You\u2019ll then have the shop directly invoice your employer for the cost of the bike. Remember, the tax exemption does not <\/strong>apply if you buy the bike and are later reimbursed by your employer.<\/p>\n The deductions taken to repay the bike costs can be taken from your wages weekly, fortnightly or monthly \u2013 this depends on your salary agreement.<\/p>\n Your employer can buy the bicycle on your behalf and not require you to pay for it. In this case you\u2019ll be exempt from BIK taxation to a cost of \u20ac1,500. If the cost of the bike exceeds this amount, a BIK charge will apply to the balance.<\/p>\n\n
How do I benefit from the Cycle to Work Scheme?<\/h2>\n
How do I buy the bicycle?<\/h2>\n
![\"cycle](\"https:\/\/taxback.com\/blog\/wp-content\/uploads\/2019\/07\/cycle-to-work-scheme-tax-relief.jpg\")
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