Answers · UK 2025/26

How does the UK Cycle to Work scheme work?

Cycle to Work lets you "hire" a bicycle through your employer via salary sacrifice. You save Income Tax and NI (25-47% depending on your tax band) on the cost. After the hire period (typically 12-48 months) you can buy the bike at fair market value (3-7% of original price).

Last updated: 6 April 2025Last reviewed: 6 April 2025How we verify

Full answer

UK Cycle to Work is a government-backed salary sacrifice scheme letting employees acquire bikes and accessories cheaply. How it works: your employer "hires" the bike from a scheme provider (Cyclescheme, Green Commute Initiative, Halfords) and you pay back the cost via reduced gross salary over 12–48 months. Because the cost is taken before tax, you save Income Tax (20%/40%/45%) and employee NI (8%/2%) — total savings of 28% (basic-rate) to 47% (additional-rate). End-of-hire options: extended hire (cheapest, often no further cost), buy outright at HMRC fair market value (typically 3% of price after 4+ years, 7% after 1 year, 13-25% earlier), or return the bike. £1,000 limit was removed in 2019 — you can now spend any amount, including for e-bikes and cargo bikes (popular post-pandemic). Excludes: scooters, motorbikes, accessories purchased separately. Bike must be used >50% for commuting (HMRC won't check, but technically a requirement). Works on top of standard salary — you can still get other benefits.