The Cycle to Work scheme is a great way to get up to 42% off the price of a new bike and safety equipment.

This government backed salary sacrifice scheme is available to PAYE employees in the UK and is the most cost-effective way to get a bike for commuting. You can even get an e bike to make your commute easier. Save money with tax free bikes.

Cycle to work is a salary sacrifice scheme. This means the cost of a new bike and cycling equipment is deducted from your salary as a non-cash benefit, so you save on tax and national insurance. Your employer buys the bike for you to ride to work and you ‘hire’ it from them. The ‘hire’ period is usually 12 or 18 months with monthly payments taken directly from your payslip before tax deductions.

As you don’t pay income tax or national insurance on the scheme payments you will save between 32% and 42% (depending on your tax band) on the overall cost of your new bike and accessories. Although your employer owns the bike, effectively it’s yours to use as you wish throughout the ‘hire’ period.

When your hire period is coming to an end you have three options to choose from.

1: You can return the bike.

2: You can immediately take ownership of your bike and pay a fee based on ‘fair market value’.
HMRC has set fair market values that employers must pay to keep the bike. So, you may be asked to pay up to 25% of the value of a bike costing more than £500 after 12 months.

3: You can extend your hire agreement at zero cost. - Most popular option -

This allows you to opt into a extended rental agreement at no extra cost.  Your hire agreement is extended but you have noting else to pay. At the end of the extended hire agreement (usually 4-5 years) ownership will automatically be transferred to you.