Pay, Payslips & Employee Benefits UKCycle to Work Scheme Explained — How to Save on a Bike Through Your Employer
How the Cycle to Work scheme works, how much you save, what bikes and equipment qualify, and the end-of-scheme options when your hire period ends.
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 |