Who qualifies
An employee whose employer participates in the Cycle to Work scheme and who buys a bicycle and safety equipment primarily for the journey between home and work.
How to claim
Your employer purchases the bike and equipment, then deducts the cost from your gross salary over up to 12 months. No myAccount claim is needed because the BIK exemption is applied directly through payroll.
Detailed explanation
Cycle to Work is a salary sacrifice arrangement that lets employees buy a bicycle through their employer free of income tax, USC and PRSI on the purchase amount. From 2026 the scheme limits remain 1,500 euro for a standard bicycle and equipment, 3,000 euro for an electric bicycle, and 3,000 euro for a cargo bicycle including e-cargo bikes. The employer purchases the bike from a participating retailer and recovers the cost from the employee gross salary over a period of up to 12 months. Because the deduction comes out of gross pay, a higher rate taxpayer effectively pays only about 49 percent of the retail price after the combined effect of saved income tax, USC and PRSI. The scheme can be used once every four years per employee for each category, so an employee could buy a 1,500 euro standard bike in 2026 and a 3,000 euro e-bike in 2030. Equipment includes lights, locks, helmets, panniers, bells, mudguards, pumps and reflective gear, but excludes mobile phone holders, GPS units and cycling clothing. The employer can choose whether or not to participate, and many large employers run dedicated portals through providers like Cyclesheme, Bike to Work or Halfords Cycle2Work. Self-employed people cannot use the scheme directly because there is no employer-employee relationship, but a director who is on payroll in their own company can.
Worked example
Mark earns 60,000 euro and buys a 3,000 euro e-bike under the scheme. As a higher rate taxpayer, his marginal rate is 40 percent income tax plus 8 percent USC plus 4.1 percent PRSI = 52.1 percent. His net cost after 12 months is roughly 1,437 euro versus the 3,000 euro retail price.