Inputs
Bike & equipment cost
Total value including accessories
£
Annual salary (gross)
Your pre-tax salary to determine tax band
£
End of hire option
Refundable deposit (7%) — keep for 3 more years
Results
Share your result
💰Total tax & NI saved
£420
28% effective discount
🚲Net cost to you
£1,185
Instead of £1,500 retail
📅Monthly sacrifice
£125
Over 12 months
What you actually pay
Income Tax saved: £300
NI saved: £120
Ownership fee: £105
Guide
How the Cycle to Work scheme works
Check eligibility
You must be a PAYE employee. Your salary after sacrifice must stay above the National Minimum Wage.
Choose your bike & equipment
Bikes, e-bikes (motor up to 250W), helmets, lights, locks, panniers — no government price cap since 2019.
Get a certificate
Your employer approves the purchase, pays the scheme provider, and you receive an eCertificate valid for 4 months.
Collect your bike
Exchange the certificate at a participating retailer for your chosen bike and accessories.
Monthly salary sacrifice
Fixed deductions from your gross salary over the hire period — reducing both Income Tax and National Insurance.
End of hire — choose ownership
Pay a market value fee to own it now, a small deposit to keep it 3 more years ("Own it later"), or return the bike.
Cycle to Work Questions
What equipment can I include?
Bikes, e-bikes (motor up to 250W), helmets, lights, locks, mudguards, panniers, cycle clothing, and maintenance tools. The equipment must be primarily for commuting. You can also get accessories without a bike if you already own one.
How does salary sacrifice actually work?
Your employer deducts a fixed amount from your gross salary each month before tax is calculated. Because your taxable income is lower, you pay less Income Tax and National Insurance. The deductions continue for the agreed hire period.
Which ownership option is best?
"Own it later" is usually the best value. You pay a small refundable deposit (3% for bikes under £500, 7% for £500+), keep the bike for 3 more years, and it's yours. "Own it now" costs more because the HMRC market value is higher at the end of the initial hire period.
Does salary sacrifice affect my pension or mortgage application?
Salary sacrifice reduces your gross salary for tax purposes, which could slightly reduce employer pension contributions if they are calculated on gross pay. It also lowers your stated income, which lenders may consider. In practice, the amounts involved in Cycle to Work are usually too small to make a material difference.
What happens if I leave my job?
If you leave before the hire period ends, you will usually need to settle the remaining balance. Most employers will ask you to pay the outstanding amount as a lump sum from your final salary or via invoice. Some may charge the market value instead if it is lower. The bike remains yours once settled. If you are made redundant, the same rules typically apply — check your scheme agreement, as terms vary between providers. It is worth reading the fine print before signing up, especially if you are considering a job change in the next 12 months.
Can self-employed people use the scheme?
No — the Cycle to Work scheme is a salary sacrifice arrangement, so it is only available to PAYE employees. Self-employed individuals can still claim tax relief on a bicycle used for business through capital allowances.
How We Calculate
- Monthly sacrifice = bike cost ÷ hire months
- Income Tax saved = bike cost × marginal Income Tax rate (20% / 40% / 45%)
- NI saved = bike cost × marginal NI rate (8% below upper threshold, 2% above)
- Total saved = Income Tax saved + NI saved
- “Own it now”: 18-25% of original price after 12 months, declining with longer hire periods
- “Own it later”: 3% deposit (under £500) or 7% deposit (£500+), refundable after 3 years
- “Return”: no fee
- Net cost = bike cost − total tax & NI savings + ownership fee
Tax rates are for the 2025/26 UK tax year. This is an illustrative model, not financial advice. Actual savings may vary depending on your employer's scheme terms.
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