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 1,250 euro for a standard bicycle and equipment, 1,500 euro for an electric bicycle or pedelec, 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 taxpayer on the 40 percent rate effectively pays only about 53 percent of the retail price after the combined effect of saved income tax, USC and PRSI, falling to about 48 percent once income passes the 8 percent USC threshold of 70,044. The scheme can be used once every four years per employee for each category, so an employee could buy a 1,250 euro standard bike in 2026 and a 3,000 euro e-cargo 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-cargo bike under the scheme. At 60,000 his marginal rate is 40 percent income tax plus 3 percent USC plus 4.2 percent PRSI = 47.2 percent. His net cost after 12 months is roughly 1,584 euro versus the 3,000 euro retail price.