Cycle to work scheme

The cycle to work scheme lets you get a bike and safety equipment through your employer and pay for it from your gross salary over an agreed period, usually 12 months. Because the payments come off before Income Tax and National Insurance, a basic rate taxpayer in England saves 28 per cent of the cost and a higher rate taxpayer saves 42 per cent. Most NHS trusts, councils, schools and government departments run a scheme, usually through an outside provider.

How the scheme works

Your employer (through a scheme provider) buys the bike and hires it to you. In return you sign a salary sacrifice agreement, and your contractual salary goes down by the monthly hire amount for the length of the agreement. Tax and NI are then worked out on the lower pay.

The legal basis is a tax exemption for cycles and cyclists’ safety equipment provided by an employer, mainly for journeys to and from work. The government’s implementation guidance says the bike should be used mainly for qualifying journeys, but there is no fixed mileage rule and no logbook.

A package can include:

• Bikes of any type, including electrically assisted pedal cycles
• Safety equipment such as helmets, lights, locks, reflective clothing, bells and mudguards
• Some accessories, depending on the provider

Clothing that is not safety equipment, such as general cycling wear, is usually excluded or limited.

What a bike costs after the savings

Say you work in England, earn £33,000 a year and choose a £1,200 bike package over 12 months. Your salary drops by £100 a month. You no longer pay £20 Income Tax and £8 NI on that £100, so your take-home pay falls by about £72 a month, or £864 over the year.

Above £50,270 the saving is 40 per cent tax plus 2 per cent NI, so the same package costs about £696 from take-home pay. In Scotland the tax part of the saving matches your Scottish band, from 19 per cent up to 48 per cent. The take-home pay calculator shows what a lower gross salary does to your monthly pay.

Your employer saves too, because employer NI at 15 per cent is not due on the sacrificed amount. Some employers pass that on as a discount or use it to pay the scheme provider’s fees.

Who can join

You need to be an employee paid through PAYE. Bank and agency workers may not be able to join, because the agreement depends on a regular salary to take payments from.

The sacrifice cannot take your pay below the National Living Wage, which is £12.71 an hour for people aged 21 and over from 1 April 2026. On a low spine point or NHS band 2 part-time, that can limit the maximum package you can have. Apprentices on the apprentice rate are especially likely to hit the limit.

Your employer can also set a maximum package value. Some providers let you add your own money on top for a dearer bike, but the part you add yourself gets no tax saving.

The catches

At the end of the hire period the bike is not automatically yours. You usually choose between handing it back, extending the hire (often for a long further period at no extra cost, after which ownership transfers), or paying a fair market value to take ownership straight away. Providers explain these options at the start, and the end-of-hire payment can eat into the saving if you choose the immediate transfer.

Salary sacrifice lowers your contractual pay. Depending on your pension scheme and employer, that can reduce your pensionable pay for the months of the agreement, which in a career average scheme means slightly less pension built up that year. It can also lower the pay used to work out Statutory Maternity Pay and other statutory payments, and it can show up on payslips that a mortgage lender looks at. The salary sacrifice guide covers these effects.

If you leave, go on unpaid leave or drop to half pay during the agreement, the remaining payments may be taken from net pay or the agreement paused. Read that part of the contract before you sign.

How to apply

Some schemes are open all year and some open only for a few weeks. The usual steps are:

1. Find the scheme on your staff intranet or benefits portal and check the maximum package and opening dates.
2. Choose a bike from a participating shop or the provider’s online store, and get a quote.
3. Apply through the provider’s website; your employer approves the request.
4. Sign the hire agreement and salary sacrifice agreement.
5. Collect the bike using the certificate or voucher the provider sends.

Payments start in the next payroll. If you are already in other salary sacrifice schemes, such as a salary sacrifice car, payroll will check that the combined amount does not take you below the minimum wage.