The Cycle to Work scheme is a government-backed benefit that lets you save on cycling equipment through salary sacrifice. Your employer buys a bike on your behalf, and you repay through pre-tax salary deductions — meaning you save the income tax and National Insurance you'd normally pay on that money. Depending on your tax bracket, that's a saving of 32%–42% on the cost.
How Cycle to Work Scheme Saves You Money
The savings come from salary sacrifice — your gross salary is reduced by the cost of the bike package. This reduces your taxable income. For a basic-rate taxpayer: 20% income tax + 8% NI (for employed) = 28% saving. For a higher-rate taxpayer: 40% income tax + 2% NI = 42% saving. Example: a £1,000 e-bike costs a basic-rate taxpayer just £720 through the scheme, or £580 for a higher-rate taxpayer.
What You Can Buy
The scheme covers bikes and cycling safety equipment including: bicycles (including e-bikes), cycling helmets, lights, locks, mudguards, panniers, and cycling clothing. There's no upper spending limit for employees — though employers can set their own caps. Since 2019, the original £1,000 cap was removed, making e-bikes (which can cost £1,500–£3,000+) fully accessible through the scheme.
- E-bikes: significant scheme savings given higher purchase prices
- Road bikes, hybrid bikes, mountain bikes: all eligible
- Safety equipment: helmet, lights, lock, waterproof clothing
- No spending cap for employees (employers may set limits)
The 'Ownership Transfer' Process
Technically, your employer owns the bike during the hire period (typically 12 months via salary sacrifice). At the end, you transfer ownership — usually for a nominal fair market value fee (often very small, like 3–7% of the original price). The total cost including this transfer fee is almost always still far cheaper than buying outright. Check your scheme provider's end-of-hire process before signing up.
What if my employer doesn't offer Cycle to Work?
Ask your HR department — any UK employer with PAYE employees can set up a scheme with providers like Cyclescheme, Halfords, or Evans Cycles. It costs employers nothing and reduces their NI bill too.
Can I use the scheme on parental leave or career breaks?
Salary sacrifice requires you to earn at least National Minimum Wage after deductions. During unpaid leave, the scheme payments would typically pause or be ineligible — check with your employer.
Cycle to Work vs Buying Outright
On a £800 bike: buying outright = £800 from after-tax salary. Scheme for a basic-rate taxpayer = ~£576. That's £224 saved. On a £2,500 e-bike: scheme saving is £700+ for higher-rate taxpayers. When you factor in commuting cost savings (replacing car/public transport), the scheme can pay back its cost in months. Combine with our salary sacrifice guide for the full picture of employer benefits.
- cycle to work
- employer benefits
- salary sacrifice
- cycling
- commuting savings