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.
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:
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 | ✗ |
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
Free Calculator
Model your Cycle to Work savings
Use the free calculator — enter your salary and monthly cycle sacrifice amount to see your exact take-home change.
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