If you run a limited company and pay yourself through it, you can usually use the cycle to work tax exemption. The law treats a company director as an employee of the company for this purpose, so the company can lend you a bike tax-free, either through a provider’s salary sacrifice scheme or by simply buying the bike and keeping it on the company’s books. If you are a sole trader, the answer is no: there is no employer and no PAYE salary, so the scheme has nothing to attach to.
The rules below come from the Income Tax (Earnings and Pensions) Act 2003 on legislation.gov.uk, HMRC’s Employment Income Manual (EIM21664) and HMRC’s National Minimum Wage Manual (NMWM05140). This is general information, not tax advice for your company.
Who can use it: the short version
| Your situation | Can the cycle exemption apply? | How |
|---|---|---|
| Director of your own limited company | Yes, in principle | Salary sacrifice through a provider, or the company buys and lends the bike |
| Employee of a company that runs a scheme | Yes | Apply through your employer’s provider |
| Employee of a company that does not run a scheme | Not until your employer joins one | Ask your employer to sign up |
| Sole trader | No | Claim the business-use share of the cost in your accounts instead |
Why a director counts as an employee here
The cycle exemption sits in section 244 of ITEPA 2003, and it is written for employers lending cycles to employees. The question most directors ask is whether that includes them, especially if they have never signed an employment contract with their own company.
Section 5 of the same Act answers it. It says the provisions that apply to employments “apply equally to offices, unless otherwise indicated”, and that for those purposes the office-holder is the “employee” and the person under whom the office is held is the “employer”. A company director holds an office. So for the cycle exemption, you are the employee and your company is the employer, contract or no contract.
That puts you under the same two conditions as everyone else. According to EIM21664, the cycles or equipment must be “available generally to all employees of the employer”, and employees “must use the cycle or equipment mainly for qualifying journeys”. Qualifying journeys include travelling between home and work. HMRC tells its own officers that employees are not expected to keep detailed records, and to accept the test is met unless there is clear evidence that less than half of the use is on qualifying journeys.
The “sole director not on a contract” question
The contract question matters in one place, and that is the National Minimum Wage rather than the tax exemption.
HMRC’s guidance on salary sacrifice and PAYE says a salary sacrifice arrangement “must not reduce an employee’s cash earnings below the National Minimum Wage (NMW) rates”. For ordinary employees, that is the rule that most often caps how much they can sacrifice.
Directors are treated differently. NMWM05140 says the minimum wage “does not apply to company directors unless they have contracts that make them workers”. A director who is paid purely as an office-holder, under the company’s articles, is not a worker for minimum wage purposes. The same manual adds two warnings: a director can also be employed by the same company under a contract, and then the minimum wage applies to the work done under that contract; and a contract can be written, oral or implied, so not having a signed document does not settle it.
In practice: if you are a director with no employment contract, the minimum wage floor on salary sacrifice may not apply to you. If you have a contract, written or implied, it does. Which side of that line you are on is exactly the kind of question to put to an accountant before you sign anything.
Route 1: join a scheme through salary sacrifice
Your company can register with a cycle to work provider in the same way as any other employer. You then apply for a bike as an employee, the provider supplies it, and your company reduces your gross salary over the hire period. Our employer’s guide covers the registration side, and how the salary sacrifice works covers the payroll side.
The saving comes from paying for the bike out of gross salary. For 2026 to 2027, GOV.UK’s rates and thresholds for employers put employee Class 1 National Insurance at 8% on earnings between the primary threshold and the upper earnings limit, and 2% above it, with employer National Insurance at 15% above the secondary threshold of £5,000 a year. Whether the sacrifice actually removes income tax or National Insurance depends on where your salary sits against those thresholds.
That is the catch for many owner-directors. If you pay yourself a small salary and take most of your income as dividends, there may be little or no taxed salary to sacrifice, and dividends cannot be sacrificed at all. In that case Route 2 is often the more natural fit.
Route 2: the company buys the bike and lends it to you
Salary sacrifice is only a way of paying for the bike. Section 244 does not require it. Your company can buy a bike and safety equipment outright, keep ownership, and lend it to you. Provided the two conditions above are met, the loan is not a taxable benefit for you.
For the company, the bike is a business asset. Accountancy firms such as Effective Accounting point out that the company can claim capital allowances on the cost, including through the Annual Investment Allowance, and reclaim the VAT if it is VAT-registered. That relief reduces the company’s taxable profits, which are taxed at the rates set out on GOV.UK’s Corporation Tax rates page: 19% on profits of £50,000 or less, 25% on profits over £250,000, with marginal relief in between.
The limit is ownership. As long as the company owns the bike, it is exempt. If the company later transfers the bike to you, that transfer is a taxable benefit based on the bike’s market value at the time. Provider schemes deal with this through an end-of-hire ownership fee linked to HMRC’s valuation table; our end of hire guide explains how that works.
The two routes side by side
| Route 1: provider scheme | Route 2: company buys the bike | |
|---|---|---|
| Who pays for the bike | You, through reduced gross salary | The company |
| Needs a salary to sacrifice | Yes | No |
| Paperwork | Provider handles the hire agreement and certificate | You keep the company’s own records |
| Who owns the bike during use | The employer or provider | The company |
| Taking ownership later | Ownership fee at the end of hire | Taxable benefit at market value if transferred |
| Minimum wage floor | Applies if you are a worker under a contract | Not relevant, as there is no sacrifice |
If you have staff, they must be offered it too
The “available generally to all employees” condition is easy to meet in a one-person company, because you are the only employee. Once you employ other people, it becomes real. A bike bought only for the director, with nothing offered to staff, falls outside the exemption.
EIM21664 gives some flexibility. Cycles do not have to be offered on exactly the same terms to everyone. But if some employees are barred from a salary sacrifice arrangement, the exemption only applies if the employer still makes loaned cycles available to those employees in another way.
Business journeys on your own bike: 20p a mile
This is a separate rule that directors often miss. If you use your own bike for business journeys, GOV.UK’s business travel mileage rules set an approved mileage rate of 20p per mile for bikes. It covers business travel only, not your normal commute, and it applies to a bike you own, not one the company has lent you.
Sole traders: why the answer is different
A sole trader is not an office-holder or an employee of anyone, so section 5 does not help. There is no employer to lend the bike and no PAYE salary to sacrifice. Depending on your accounting method, you may be able to claim the business-use share of a bike’s cost in your accounts instead. Our guide to cycle to work for the self-employed covers those options.
If you are an employee and your company does not take part
An employee cannot join a cycle to work scheme on their own: the employer has to register with a provider and run the salary sacrifice. What you can do is ask. Our guide on what to do if your employer does not offer the scheme sets out how to check whether your employer is already registered and how to make the case to HR.
Frequently asked questions
Can a sole director of a limited company use the cycle to work scheme?
Yes, in principle. ITEPA section 5 treats a director as an employee of the company for employment income purposes, so the section 244 cycle exemption can apply, as long as the bike is available generally to all employees and used mainly for qualifying journeys.
Do I need an employment contract with my own company?
Not for the tax exemption. A contract matters for the National Minimum Wage: HMRC says the minimum wage does not apply to directors unless they also have a contract that makes them a worker, and salary sacrifice must not take a worker’s pay below it.
Can my company just buy the bike instead of using salary sacrifice?
Yes. The company can buy the bike, keep ownership and lend it to you. If the company later transfers the bike to you, the transfer is a taxable benefit based on market value.
Can a sole trader join a cycle to work scheme?
No. There is no employer and no PAYE salary to sacrifice. A sole trader may be able to claim the business-use share of the bike’s cost in their accounts instead.
Everything above is general information drawn from HMRC and GOV.UK guidance, not tax advice for your company. Company structures, contracts and payroll set-ups vary, so check with an accountant before you set up either route. For the scheme basics, start with our cycle to work scheme guide and savings calculator.
