What Is The Cycle To Work Scheme?

Cycle To Work
(Image credit: Unknown)

There is no better time to start cycling to work than the spring and summer. You have up to six months ahead of you when you can rely on the weather being agreeable more often than not and it’ll still be light out for your ride home.

If you need to get your hands on a bike to take advantage of these bike-friendly conditions, it’s worth seeing if your employer takes part in the Cycle to Work scheme so you can ultimately pay less for that bike.

What is the Cycle to Work scheme?

The scheme helps you to get your hands on a new bike by spreading the payment for it over a number of months – and by netting you a significant saving, because the cost of the bike and accessories comes out of your pay before tax.

Your employer will be paying for the bike, so you’ll need to check to see if it’s signed up for the scheme. And if not, ask your boss why not, because the employer also benefits by making a saving on its employer national insurance contribution (of 13.8% of the value of the bike), as well as having a fitter, happier employee.

How does it work?

If your employer is signed up to the scheme you can pick out the bike and accessories you want from one of more than 2,000 participating retailers. Then head back to your HR department to get a certificate for the value of what you want, which you can then use to get your bike from the retailer. From then on the monthly repayment will start popping up on your payslip, coming out of your gross salary so you don’t pay tax on it.

Generally you sign up for 12 months where you’re technically hiring the bike from your employer, though some employers do allow you to pay the money back over a longer period.

Once you’ve finished this period, you have to pay an additional ownership fee to keep the bike, buying it at what HMRC terms a fair market value. This may seem a bit counterintuitive since you’ve just paid back the entire cost of the bike, but you’ve saved money on the tax so overall you’ve saved cash.

There are two ownership options to choose from, with “Own it later” being the cheapest. To own it later you pay a 3% deposit on bikes that cost less than £500 new and 7% on bikes that cost over £500. In three years you can either return the bike and get your deposit back, or just hold on to the bike. The “Own it now” option fee is 18% or 25% of the value.

How much do you save?

As much as 39% of the total you spend. Since the savings are made on the basis that you don’t pay tax on the money you spend on the bike, they are linked to how much tax you pay. A low-rate taxpayer will save 32% of the value of the bike and accessories they buy, while a higher-rate tax payer will save 42%. That’s during the initial hire period, and you’ll then have to pay the ownership fee at the end. If you opt for the more advantageous “Own it later” approach then your overall saving will end up at between 25% and 39% of the value of the bike, depending on your tax rate.

What can you get?

Anything you want, as of June 2019. That’s when cycling minister Michael Ellis revealed that the £1,000 cap that had always been part of the scheme didn’t really exist. Or did exist but only for retailers not registered with the Financial Conduct Authority. Essentially, if you want to spend more than £1,000, go right ahead – you just might not be able to do it at your favourite independent bike shop, because they’re less likely to be registered.

The de facto lifting of the cap means that electric bikes, which tend to cost at least £1,500, are up for grabs on the scheme. E-bikes are the smartest option for many commuters, offering the chance to fit in some light to moderate exercise (trust us, it all counts) during your trip to and from the office without any fear of getting sweaty or dying on uphills.

Not having to work within the confines of the £1,000 cap means you have your pick of non-electric bikes too. Obviously you don’t have to spend anywhere near £1,000 to get a great commuter option, but if you want something special that you can use on long rides at the weekend as well as for commuting, that’s now available through the scheme without you having to stake some of your own cash up front. You can even get more than one bike, as long as the primary purpose is commuting.

If you’re kitting yourself out from scratch it’s worth buying essential accessories through the scheme too. It’s vital to have at least one but preferably two good-quality bike locks, and you’ll also probably want a helmetbike lights and one or two bits of cycling gear like a jacket and jersey.

Can you get a bike that’s on sale?

Absolutely, although not from every retailer. Fortunately there are plenty of no-quibble retailers that allow you to hit the sales, including big hitters like Evans CyclesWiggleCycle Surgery and Chain Reaction Cycles.

Are there other similar schemes?

There are indeed. Most major cycling retailers will be part of several schemes alongside Cycle to Work, and Halfords, Wiggle, Chain Reaction Cycles and Evans Cycles all operate their own similar schemes.

Nick Harris-Fry
Senior writer

Nick Harris-Fry is a journalist who has been covering health and fitness since 2015. Nick is an avid runner, covering 70-110km a week, which gives him ample opportunity to test a wide range of running shoes and running gear. He is also the chief tester for fitness trackers and running watches, treadmills and exercise bikes, and workout headphones.