Answers · UK 2025/26

How does the Cycle to Work scheme save tax?

Cycle to Work lets you sacrifice salary for a bike and accessories. You pay nothing up front and avoid Income Tax and NI on the sacrificed amount — saving 28-42% off the retail price for basic-rate and 47% for higher-rate employees, before any small end-of-scheme transfer fee.

Last updated: 16 May 2026Last reviewed: 16 May 2026How we verify

Full answer

Run by employers since 1999, Cycle to Work is a salary-sacrifice scheme letting an employee hire a bike and safety equipment from the employer for an agreed period (usually 12 months). The monthly hire payments come out of gross pay, before Income Tax and NI are calculated. Worked example: a £1,200 bike on a 12-month sacrifice costs £100/month in gross salary. A basic-rate employee saves 20% tax + 8% NI = 28% = £336; a higher-rate employee saves 40% + 2% = 42% = £504. The bike is technically rented from the employer; at the end of the hire period you can return it, extend the hire for a nominal fee, or buy it for HMRC's valuation table — 18% of original price after 4 years for bikes under £500, 25% for higher value, falling to nil after 6 years. Many employers use an "extended use agreement" so the small final payment is delayed and the bike effectively becomes yours for free. Since 2019 the £1,000 cap is gone — employers with consumer-credit-authorised providers can offer bikes of any value, including e-bikes. The scheme covers helmets, locks, lights and waterproofs bought at the same time.