Cycle to Work Scheme limit increased for cargo bikes; further incentives promised

The Government has agreed to increase the limit on the Cycle to Work in the Finance Act which gives the legal backing to Budget 2023 — this follows news that there was pushback from Green Party’s coalition partners against incentives for bicycles.

The current top limit in the scheme — open only to PAYE workers — is currently to the value of €1,500 for electric assist bicycles. A new limit of €3,000 is to apply to both electric assisted and regular cargo bikes from January 1, 2023.

Some well-know bicycle brands sell bicycle for twice this amount and in such cases the the Cycle to Work Scheme you will be exempt from tax on the benefit of the cost of the bicycle up to the €3,000 limit.

The Cycle to Work Scheme is a tax scheme, as Citizensinformation.ie explains it: “As an employee you save on the costs of cycling to work because your repayments come out of your salary before tax, USC and PRSI are deducted. This means that someone on the highest rate of tax will save almost half of the cost of a new bike and equipment.

Simplified: The scheme gives to a discount of up to nearly 50% on the higher rate of tax and around 30% on the standard rate, up to the cargo bike limit of the purchase cost. If the bike costs more you don’t get a reduction on that portion.

This measure was added since Budget Day and is limited to PAYE workers as the Cycle to Work Scheme cannot be expanded. The scheme has been criticised by Government and opposition politicians as it helps higher tax earners more and for excluding a range of people including pensioners, the self-employed, the underemployed, part-time workers, unemployed people, those in education, and employers who choose not to be involved.

As IrishCycle.com reported, on Budget Day, the much-expected incentives for bicycles in the Budget were not announced as had been expected and sources told this website that this was because the Green Party had to use its ‘political capital’ regarding transport to maintain the 20% cuts for public transport tickets and continuation of the funding increases for extra bus services, such as BusConnects.

Today, the Department of Finance said: “The Finance Bill provides for an increase in the threshold for cargo bikes under the cycle to work scheme.”

It added: “Cargo bikes can be considerably more expensive than ordinary bikes and even electric bikes and therefore the threshold for cargo bikes is being increased to €3,000 to reflect this. The change will apply from 1 January 2023.”

In a separate press release this afternoon, Minister for Transport Eamon Ryan welcomed the move and also said there would be further incentives.

Minister Ryan said: “This increase will help make cargo bikes more affordable for those choosing to purchase a new bike under the bike to work scheme. Cargo bikes have become more popular in recent years with many people using them to bring their kids to school, for shopping and for work purposes as delivery vehicles.”

“The cost factor, however, is an impediment to many people who may want to buy one. We hope that by increasing the limits for cargo bikes, more people will be able to choose them as a more sustainable way to get around,” he said.

“We also need to see our courier and delivery companies moving at a faster pace from vans and trucks to cargo bikes and we are looking at ways of supporting this transformation, specifically for the last mile element of their deliveries,” the Minuster said.

He added: “The coming years will see a re-allocation of road space away from private vehicles towards public transport and space for people walking and cycling and cargo bikes will play a large part in how we use our roads. I look forward to seeing many more cargo bikes on our roads over the coming years, helped by this decision today to make them more affordable.”

The press release paraphrases Minister Ryan as stating that the Department of Transport’s move to increase the limit was “informed by the experience of many people who have said that they may use their car to make very short journeys to drop their kids to school. They then often continue their journey to work by car where they might consider cycling the entire route if they were able to transport the kids by bike. Cargo bikes mean that people can make many journeys that might otherwise take place by car.”

The Department of Transport also said that it is “examining other ways to increase the number of cargo bikes”, and, in addition to this, National Transport Authority “is looking at trialling the Bicycle Library concept at a number of schools in the coming year, so that parents can experience using Cargo Bikes and other family bikes and be confident that they would use it before investing.”


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3 comments

  1. This is welcome news. But… still well below the grants available for electric cars. Also, you could get a new electric car every year and claim the benefit. We need that for bikes too. In addition, you can get an electric car just for a hobby, nothing to do with a drive to work scheme. Hopefully some of the further upcoming changes the minister hinted at will address some of that inequality.

    Reply
    • Yes. A bicycle is a more definite environmental benefit than any sort of car, whether electric or hydrogen or some other fuel source, and nearly always for a small fraction of the price. An electric crossover or SUV still contributes to traffic and it usually has greater weight resulting more of those microplastics or small particles thrown off, and the wearing out of expensively built infrastructure like motorways.

      Reply

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