Answers · UK 2025/26

How much can I save with the Cycle to Work scheme?

The Cycle to Work scheme lets you hire a bike and safety equipment through salary sacrifice, saving Income Tax and National Insurance on the amount sacrificed -- typically saving a basic rate taxpayer around 32% and a higher rate taxpayer around 42% of the bike's cost (combining tax and NI savings), before any final ownership payment. There is no fixed price cap for employers with FCA authorisation, though many capped schemes still use a £1,000 limit unless the employer holds a consumer credit licence for higher-value bikes.

Last updated: 2 July 2026Last reviewed: 2 July 2026How we verify

Full answer

The Cycle to Work scheme is a salary sacrifice benefit that has remained popular since it was introduced in 1999, offering a genuine and fairly simple way to reduce the cost of a new bike (and related safety equipment) for commuting. **How the savings work** Under salary sacrifice, you agree to give up part of your gross salary in exchange for your employer providing (technically hiring to you) a bicycle and/or safety equipment. Because the sacrificed amount is deducted before Income Tax and National Insurance are calculated, you effectively pay for the bike out of pre-tax and pre-NI income. A basic rate (20%) taxpayer saves roughly 20% Income Tax plus 8% employee National Insurance, around 28-32% combined depending on exact salary position; a higher rate (40%) taxpayer saves roughly 40% Income Tax plus 2% NI, often 42%+ combined -- these are approximate, as exact savings depend on your specific income and NI position. **No fixed price limit for authorised employers** Historically, the scheme had an informal £1,000 limit tied to Consumer Credit Act rules, but employers who obtain the appropriate FCA authorisation (or use a scheme provider who holds it) can offer bikes above £1,000 in value, which has made the scheme increasingly attractive for e-bikes and higher-specification cycles, which often exceed this threshold. **Hire period and final ownership** Technically, throughout the salary sacrifice period (commonly 12 months, though some schemes run longer), you are hiring the bike from your employer, not buying it outright. At the end of the hire period, you're usually offered the option to take ownership of the bike, historically for a final 'fair market value' payment based on HMRC guidance tables (which reduce with the age and original cost of the bike) -- some scheme providers now build this final payment into the structure differently, so check your specific scheme's terms. **Must be used mainly for commuting** HMRC rules require that the bike is used mainly (in practice, interpreted reasonably rather than requiring every single journey to be a commute) for qualifying journeys, such as travelling to and from work or between workplaces -- it doesn't need to be used exclusively for commuting, but this is meant to be a genuine work-travel benefit rather than purely a personal purchase route. **Salary sacrifice reduces your 'official' salary** Because you're technically reducing your gross salary for the sacrifice period, this can, in principle, affect salary-linked calculations such as mortgage affordability assessments, some means-tested benefit calculations, or pension contributions if they're calculated as a percentage of a lower post-sacrifice salary -- worth checking if you're close to a salary threshold for another purpose. **Practical tip** Check whether your employer's scheme has a price cap, compare the total cost (including the end-of-hire payment) against buying outright with a 0% purchase credit card, and confirm how the scheme affects your payslip-reported salary if you have an upcoming mortgage application or other income-dependent decision.