The Cycle to Work scheme is one of the simplest salary sacrifice benefits available to UK employees — and one of the most underused. You can save between 28% and 62% on the cost of a new bike, depending on your tax rate.
For a full overview of all salary sacrifice benefits including EVs and pension contributions, see our workplace benefits guide.
Calculate your Cycle to Work savings
Enter your salary and monthly cycle sacrifice to see your exact take-home impact.
How does Cycle to Work work?
Your employer buys a bike (and safety equipment) and loans it to you. You repay the cost through salary sacrifice over 12 months — meaning the payments come out of your gross pay before tax and National Insurance are calculated.
At the end of the loan period, you either:
- Pay a small "fair market value" fee to own the bike outright (typically 3–7% of original value)
- Return the bike
- Enter a further loan period
Because the sacrifice reduces your gross pay, you save both income tax AND National Insurance — not just tax relief like a standard purchase.
How much can you actually save?
Here's a real example for a basic rate taxpayer buying a £1,000 bike:
| Bike cost | £1,000 |
| Monthly sacrifice (12 months) | £83.33/month |
| Income tax saved (20%) | £200 |
| NI saved (8%) | £80 |
| Total saved | £280 |
| Real cost of £1,000 bike | £720 |
A higher rate taxpayer saving 40% tax + 2% NI would pay just £580 for the same bike.
Savings by tax band
| Tax band | Tax rate | NI rate | Saving per £1,000 | Real cost |
|---|---|---|---|---|
| Basic rate (£12,571–£50,270) | 20% | 8% | £280 | £720 |
| Higher rate (£50,271–£100,000) | 40% | 2% | £420 | £580 |
| 60% trap (£100,001–£125,140) | 60% | 2% | £620 | £380 |
The 60% effective rate applies because every £2 of income above £100,000 loses £1 of Personal Allowance. Cycle to Work sacrifice reduces your Adjusted Net Income — potentially restoring your full allowance.
What can you buy?
The scheme covers:
- Bikes — road, mountain, hybrid, electric, folding
- Safety equipment — helmets, lights, locks, hi-vis clothing, panniers
There is no upper limit on bike value since 2019 (previously capped at £1,000), though your employer may set their own limit.
Electric bikes are included, but the scheme only covers the bike itself — not the electricity to charge it. E-bikes are treated the same as regular bikes (no Benefit in Kind tax).
Does Cycle to Work affect my mortgage?
Yes — salary sacrifice reduces your gross pay on paper. Some mortgage lenders use gross salary to calculate affordability. If you're applying for a mortgage soon, check with your adviser before starting a cycle scheme.
How to set it up
- Check your employer offers it — most large employers do; smaller ones may not
- Choose a scheme provider — Cyclescheme, Halfords, Evans Cycles, and others
- Select your bike — get a quote from a participating retailer
- Sign the salary sacrifice agreement — this amends your employment contract
- Collect your bike — payments start on your next payslip
Cycle to Work vs buying outright
| Cycle to Work | Buy outright | |
|---|---|---|
| Cost (basic rate, £1,000 bike) | £720 | £1,000 |
| Cost (higher rate, £1,000 bike) | £580 | £1,000 |
| Spread over 12 months | ✓ | Only if 0% credit |
| Affects gross pay | ✓ | ✗ |
| Affects mortgage assessment | Possibly | ✗ |
What this means for you
On a £50,000 salary, a £1,000 bike costs £720 via Cycle to Work — a £280 saving with no paperwork beyond signing a salary sacrifice agreement.
At £60,000, the saving rises to £420 on the same bike. If the sacrifice also nudges your Adjusted Net Income below a key threshold — such as £60,000 for Child Benefit — the total benefit is far larger than the bike saving alone.
For most employees, Cycle to Work is the simplest salary sacrifice benefit to access. If your employer offers it, there is rarely a reason not to use it.
Try the TaxCal UK calculator to estimate your take-home pay.
Summary
- Cycle to Work saves 28–62% depending on your tax rate
- No Benefit in Kind tax — unlike most other salary sacrifice benefits
- No upper spend limit since 2019
- Reduces Adjusted Net Income — can help with Child Benefit and Personal Allowance traps
- Check mortgage implications before signing up
FAQ
Is there a minimum bike value for Cycle to Work?
No minimum. Most schemes start from around £100. The upper limit is set by your employer — many cap at £1,000 or £5,000, though there is no legal maximum since 2019.
Do I own the bike at the end?
Not automatically. At the end of the hire period you pay a small fair market value fee (typically 3–7% of original cost) to own it outright. Some schemes offer a longer secondary hire period instead.
Can I use Cycle to Work for an e-bike?
Yes. Electric bikes are fully covered and treated the same as regular bikes — no Benefit in Kind tax applies.
Does Cycle to Work affect my mortgage application?
Potentially. Salary sacrifice reduces your gross pay on paper, which some lenders use for affordability calculations. Check with your mortgage adviser before signing up if you are applying soon.
Can I use Cycle to Work if I only cycle occasionally?
Yes. There is no requirement to cycle to work every day or at all. The scheme is open to any employee whose employer offers it.
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