The Irish government has announced changes to the bike to work scheme, which offers a tax incentive for those buying a bike for the purposes of commuting.
Until now the maximum amount for bike purchases covered under the scheme was €1,000. However, this has been increased to €1,250 for regular bikes and €1,500 for ebikes, up from €1,000.
It means the savings for purchasing a regular bike will be up to €637.50 and for purchasing an ebike the savings will be up to €765.
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People can use the scheme once every four years, with no limit on the number of times one person can avail of the scheme apart from the four-year span between purchases.
Until now the span between bike purchases under the scheme was five years, but that has now been reduced.
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There has already been a very significant boom in cycling in Ireland in recent months as more people turned to cycling during Covid19, with local bike shops also reporting being busier than ever.
And now the new higher allowances under the bike to work scheme will likely add to the surge in bike sales.
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Until now an employee could buy a bike, for any price,
and the first €1,000 was covered under the bike to work scheme.
The bike was effectively purchased via the employer and
included a tax break of up to 51 per cent on the first €1,000 value of the bike.
It means a spend of exactly €1,000 on a bike and safety kit – such as a helmet and lights – would cost the employee €490, which can be paid for in installments from salary payments up to 12 months.
If the bike was more than €1,000, the saving would still be up to €510. The maximum saving was achieved by those paying higher rates of tax.
Lower earners would still achieve savings, but not as high as 51 per cent - or €510 - on the first €1,000 cost of their bike and safety kit.
However, the value now covered under the scheme is €1,250
for any bike and €1,500 for ebikes.
The changes to the scheme have been announced under the
wider stimulus package for the economy due to Covid19.
The Government is also trying to encourage more people to cycle to take pressure off public transport as capacity has fallen due to social distancing requirements.
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