July 14, 2022

How many times have you heard about the ‘cycle to work scheme’ but you’re still not entirely sure how it works? It seems the popularity of the scheme has sharply increased but a lot of employers and employees alike, are still scratching their heads about the finer details of the government backed initiative.

If you’re keen to get signed up to the Cycle to Work scheme yourself, or your employer still needs a gentle reminder of the incredible benefits it can offer you and them, you’re in the right place. We’re going to break it down for you and answer some of the most frequently asked questions so you can be crystal clear about what the scheme offers.

What Is The Cycle to Work Scheme?

Man riding e-bike in London on his commute to work

The Cycle to Work scheme was created by the government back in 1999 as a way to encourage people to ride a bike to work. It means your employer purchases a push bike or an e-bike for you and you hire it from them through salary sacrifice every month before your deductions are taken.

Because the money is taken from your gross salary to pay for the bike (your salary before tax deductions) it reduces your gross salary overall, this means you pay less tax and National Insurance contributions. In essence, it means you can save a whopping 33-43% on a new bike and accessories, so that swish top of the range bike suddenly doesn’t seem so out of reach.

How Much Money Can I Save Through The Cycle to Work Scheme

Because you are lowering the amount of income that you can be taxed on, the amount you save will depend on your tax rate and how much the bike costs. The normal rates of income tax are 33% for a standard tax payer and 43% for a higher rate tax payer. Let’s take a look at an example below to make it easier for you to digest.

	Low Tax Bracket Salary - £30k	High Tax Bracket Salary - £65k
Total cost of bike package	£800	£800
Number of salary sacrifices (The amount of months your cost is spread over).	12	12
Your monthly take home pay will be reduced by	£44.50	£37.83
Which means in total you will save this much	£266/33.25%	£346/43.25%

We know this can all seem a little confusing, the easiest way to find out exactly how much you can save on the Cycle to Work scheme is by heading over to the Green Commute Initiative website. They’ve got a handy calculator which can tell you your total savings based on your bike package price and annual or monthly salary.

Why Do I Have To Rent The Bike on The Cycle to Work Scheme?

Because the Cycle to Work scheme was initially set up to promote work journeys as opposed to cycling in your own time, it means that you do not own the bike whilst you are paying for it through salary sacrifice. Your employer technically owns the bike and/or accessories throughout the hire period and at the end of this timeframe, you can decide how you want to proceed. You can either;

Rehire the bike back by paying a small deposit.
Buy the bike for good so you are the official owner.
Give the bike back.

If you would like to buy the bike back at the end of the agreed term in your Cycle to Work scheme, you will need to make a one off payment to the company that provided the scheme for you. This depends on the bike’s initial value and how long you’ve been using the bike for. Take a look at the table below which explains how much HMRC would like you to pay if you want to own the bike or other bike related equipment.

Age of bike	Original price of bike less than £500	Original price of bike more than £500
12 months	18%	25%
18 months	16%	21%
2 years	13%	17%
3 years	8%	12%
4 years	3%	7%

Is There a Way To Reduce The Final Payment?

Yes, certain Cycle to Work scheme providers allow employees to lease the bike up until a point where there is no end payment that needs to be cleared. For example, a Cycle to Work scheme provider called The Cycle Scheme allows employees to pay a small deposit so they can keep their bike for a few more years, after this period of time it becomes yours at no extra cost.

Who Are The Top Cycle to Work Scheme Providers?

Using a third party scheme provider takes the majority of hassle out of running it. These companies are dedicated to the Cycle to Work scheme which means employers get an end-to-end scheme and management solution. They don’t have to do anything; all of the work lies in the hands of the provider. The top Cycle to Work scheme providers can be seen below.

Is There a Cap on How Much My Bike and Accessories Can Cost?

You’ll be pleased to know, that there’s no limit on how much your bike and accessories cost. This means you can buy a top of the range e-bike like WAU’s longest range electric bike at a discount price.

Our 100 mile - 900Wh bike comes in at £2,490, it lets you travel wherever you fancy without fear of your power running low.

If you need a little help choosing the best long range e-bike for your work commute check out this article.

Can I Buy My New Bike From Any Retailer?

The majority of Cycle to Work schemes cover a large proportion of bike retailers on the market and which shop you can purchase from will depend on which scheme your employer is enrolled in. Take a look below to see which shops accept which schemes:

Tredz - Halfords C2W, Bike2Work Scheme, Salary Extras, Cycle Scheme, Cycle Plus and Enjoy Benefits.
Evans Cycles – Ride to Work, Vivup, c2w Support, Cycle Scheme, Bike2Work Scheme and Green Commute Initiative.
Halfords Cycles/Cycle Republic – Cycle2Work.
Wiggle – Wiggle Cycle to Work, Bike2Work Scheme, Cycle Scheme, Gemelli and Cycle Plus.
Chain Reaction Cycles – Cycle Scheme and Chain Reaction Cycle's Ride 2 Work.

Am I Allowed To Ride My Bike To Places Other Than My Office?

Yes of course you are, the technicalities of the Cycle to Work scheme make it sound very rigid but in reality, you’re simply getting a bike for a fraction of the cost that you can ride whenever you like.

No one tracks your bike or checks up on you, so feel free to ride till your hearts content (as long as you go to work of course).

If you want some inspiration for your weekend bike excursions, check out the 10 best bike rides in the UK.

What’s The Benefit For My Employer If They Sign Up To The Cycle To Work Scheme?

You’ll have happy, healthy employees with super slick bikes, that's enough surely? Well even if you do need more convincing, not to worry, because there are tons of benefits you can reap as an employer when you enter the scheme.

First of all, it’s free of charge to join and it costs £0 to run. All you have to do is fork out the initial lump sum of cash for the bike but you get that back in the payments deducted from your employee's gross salary.

Second of all, the scheme will actually save your business money. This is because the scheme means you won’t make employer’s National Insurance Contributions – these are usually around 13.8% – depending on the value of the Cycle to Work scheme package. This means, if an employee gets a bike and/or accessories that are £1,000 it will save you £138.

You should notice a decline in lateness because cyclists aren’t affected by traffic jams, public commuting delays or cancellations.

Alongside more punctual employees expect healthier employees because regular exercise like cycling revs up the immune system making your staff more resistant to common viruses. They’re also six times less likely to pick up an infection than those who use public transport. So if you want to keep those pesky germs at bay, get yourself enrolled.

I Want To Enrol In The Cycle To Work Scheme. What Should I Do Now?

The enrolment process of the Cycle to Work scheme can vary from provider to provider but the general process looks a little something like this:

Talk To Your HR Department

Find out what scheme they are enrolled in (if they’re not, it’s time for you to tell them all the wonderful benefits you’ve learnt in this article).

If They Are Enrolled

You'll need to request a certificate as this is what you need to take to your chosen bike shop.

Take The Certificate To a Bike Retailer

of your choice (providing the retailer is included in the Cycle to Work scheme that your employer has chosen).

Redeem The Certificate

You'll need to redeem it against the price of the bike and any other equipment you choose.

Start Paying

Your salary sacrifice will commence from your next pay packet.

And that’s exactly how Cycle to Work Schemes work, they’re a fantastic way to reduce carbon emissions, improve employee morale, save money on commuting and reduce city congestion. If you haven’t already, enrol yourself or your company and start experiencing the great outdoors.