How much do you save with the Cycle to Work scheme?

You save because the payments come from your gross salary — before income tax and National Insurance. A basic rate taxpayer saves around 32% on the cost of a bike and accessories. Higher rate taxpayers save around 42%, and additional rate taxpayers save around 47%. On a £1,000 bike, a basic rate taxpayer saves roughly £320.

Can I keep the bike at the end of the Cycle to Work scheme?

Yes. At the end of the hire period (usually 12 months), you have options: pay a 'fair market value' fee to own the bike outright (typically 3%–7% of the original price for bikes under £500, or 18%–25% for bikes over £500), extend the hire for a further period at no cost, or return the bike. Most people pay the small fee to keep it.

Is there a limit on how much I can spend on Cycle to Work?

There is no legal limit. The previous £1,000 cap was removed in 2019. However, individual employers set their own limits, and some still cap it at £1,000–£2,000. Many now allow up to £3,000–£5,000, and some have no limit, making electric bikes (which typically cost £1,500–£4,000) accessible through the scheme.

Do electric bikes qualify for the Cycle to Work scheme?

Yes. Electrically Assisted Pedal Cycles (EAPCs) qualify as long as they meet UK legal requirements: the motor must have a maximum power of 250 watts and only assist while pedalling, cutting out at 15.5 mph. E-scooters and speed pedelecs do not qualify.

Cycle to Work Scheme Explained — How to Save on a Bike Through Your Employer | PocketWise

The Cycle to Work scheme lets you get a new bike and accessories through your employer, paid for from your gross salary — saving you up to 47% on the cost. It’s one of the most popular salary sacrifice benefits in the UK.

How the Scheme Works

Step	What happens
1	Your employer signs up with a Cycle to Work provider
2	You choose a bike and accessories from a participating retailer
3	Your employer hires the bike on your behalf
4	You repay the cost through salary sacrifice over 12 months (sometimes longer)
5	At the end of the hire period, you choose to keep, extend hire, or return the bike

Because payments come from your gross salary (before tax and National Insurance), you pay less than if you bought the bike yourself.

How Much You Save

Tax band	Income tax rate	NI rate	Total saving	Example: £1,000 bike
Basic rate (20%)	20%	8%	~32%	You pay ~£680
Higher rate (40%)	40%	2%	~42%	You pay ~£580
Additional rate (45%)	45%	2%	~47%	You pay ~£530

Savings on Different Bike Prices

Bike cost	Basic rate saving	Higher rate saving	Additional rate saving
£500	~£160	~£210	~£235
£1,000	~£320	~£420	~£470
£2,000	~£640	~£840	~£940
£3,000	~£960	~£1,260	~£1,410
£5,000	~£1,600	~£2,100	~£2,350

What Qualifies

Bikes

Qualifies	Doesn’t qualify
Standard bicycles	Motorbikes / mopeds
Road bikes	E-scooters
Mountain bikes	Speed pedelecs (over 15.5 mph assist)
Hybrid bikes	Segways
Folding bikes
Electric bikes (EAPCs up to 250W, 15.5 mph)
Cargo bikes (pedal-powered)

Accessories

Qualifies	Doesn’t qualify
Helmets	Clothing (unless specifically cycling-specific)
Lights	Action cameras
Locks	General sportswear
Mudguards	Car bike racks
Panniers and bags
Pumps and tools
Reflective gear
Cycle computers
Child seats

Cycle to Work Providers

Provider	Notes
Cyclescheme	Largest — accepted at most independent bike shops
Cycle Solutions	Wide range of retailers
Green Commute Initiative	No price cap, any retailer
Halfords Cycle2Work	Halfords-specific scheme
Evans Cycles / Trek	Brand-specific schemes

Which provider you use depends on which one your employer has partnered with.

End of Scheme Options

At the end of the hire period (usually 12 months), you have three options:

Option 1: Pay to Own

HMRC sets “fair market value” guidelines:

Original bike price	Ownership fee (after 1 year)	Ownership fee (after 3 years)
Up to £500	3% of original price	Negligible
£501–£1,000	7% of original price	3%
£1,001–£2,000	18% of original price	7%
£2,001–£3,000	25% of original price	12%
£3,001+	25% of original price	12%

Example: For a £1,500 bike after 12 months, you’d pay ~£270 (18%) to own it outright.

Option 2: Extended Use Period

Many schemes offer an extended hire period (usually 3 more years) at no extra cost. At the end, the ownership fee is much lower.

Option 3: Return the Bike

You can return the bike to the provider, though this is uncommon.

Things to Watch Out For

Issue	Detail
Minimum wage check	Salary sacrifice can’t take you below the National Minimum Wage
Impact on other benefits	Reducing gross salary may affect mortgage affordability calculations, statutory maternity/paternity pay, and pension contributions
Leaving your job	If you leave before completing payments, you may need to pay the remaining balance as a lump sum or the employer may deduct from your final pay
Employer participation	Your employer must offer the scheme — you can’t set it up independently
Insurance	Cyclescheme and other providers usually include theft and damage insurance during the hire period — check the terms

Cycle to Work vs Buying Outright

Factor	Cycle to Work	Buying outright
Upfront cost	£0	Full price
Total cost	Lower (tax saving)	Full price
Ownership	After hire period + fee	Immediate
Choice of retailer	Must use scheme partner	Any retailer
Second-hand bikes	No	Yes
Finance flexibility	Fixed monthly from salary	Your choice

How to Apply

Check if your employer offers it — ask HR or payroll
Browse eligible bikes — through your employer’s chosen provider
Get a quote — the provider will show your monthly salary sacrifice amount
Submit your application — usually online, approved by your employer
Collect your bike — from the retailer
Payments begin — deducted from your gross salary each month

Summary

Detail	Info
Savings	32%–47% depending on tax band
Salary sacrifice period	Usually 12 months
Electric bikes	Yes — up to 250W, 15.5 mph
Price limit	No legal limit (employer may set one)
Keep the bike	Pay 3%–25% after hire ends
Employer must opt in	Yes — check with HR