Offering the Cycle to Work scheme is one of the simplest staff benefits an employer can set up: it costs little or nothing to run, saves you National Insurance, and gives your team a tax-efficient way to get a bike for commuting. This guide explains how the scheme works from the employer’s side — the savings, the providers and the rules — so you can decide whether to offer it.
Why offer Cycle to Work?
It is a government salary-sacrifice scheme, so the tax advantages are built in rather than something you fund. Your employees get a bike and safety equipment from gross pay, saving income tax and National Insurance; you save employer National Insurance on the amount sacrificed. On top of the numbers it supports healthier, more reliable commuting and is an easy addition to a benefits package. Our main Cycle to Work guide and calculator shows what employees save.
How the scheme works for you
Under salary sacrifice, your employee agrees to give up an agreed amount of gross pay — usually over 12 months — in return for hiring a bike and accessories that you provide. Because that pay is never received, neither side pays National Insurance on it. Since April 2025 employer (secondary) National Insurance has been charged at 15%, so you save roughly £15 in NI for every £100 an employee sacrifices. For many employers that saving covers the provider’s admin fee, making the scheme close to cost-neutral.
Choosing a scheme provider
Most employers run the scheme through a provider that handles the certificates, the retailer network and the paperwork rather than doing it in-house. Cyclescheme, Halfords Cycle2Work and Green Commute Initiative are the best known; they differ on retailer choice, admin fees and end-of-hire arrangements. We compare them in our provider comparison, and explain the most popular one in our Cyclescheme guide. The provider also holds the Financial Conduct Authority authorisation needed for packages over £1,000, so you do not have to.
What it costs and what you save
Providers typically charge a small commission on each certificate, taken from the retailer or as an admin fee. Against that you set the employer National Insurance saving of 15% of everything sacrificed, which often makes the scheme cost-neutral or better across the workforce. VAT is accounted for through the salary-sacrifice arrangement, and your provider will explain how they handle it. There is no need to buy or hold stock — the employee chooses the bike and the provider settles with the retailer.
Staying compliant
Two rules matter most. First, salary sacrifice cannot take an employee’s pay below the National Minimum or National Living Wage, so the lowest earners may not be eligible. Second, the equipment is hired to the employee during the agreement, not sold, with ownership handled at the end — we explain that step in our end of hire guide. Beyond that, packages over £1,000 need FCA authorisation, which the provider supplies, and the bike should be used mainly for commuting.
Frequently asked questions
Does the Cycle to Work scheme cost the employer anything?
Providers charge a small admin fee or commission, but the employer National Insurance saving of 15% on the sacrificed amount often covers it, so many employers run the scheme at close to no net cost.
How much employer National Insurance do we save?
Since April 2025 employer National Insurance is 15%, so you save about £15 for every £100 an employee sacrifices through the scheme.
Do we have to set a spending limit?
There has been no statutory cap since 2019, so you set your own limit to suit your workforce. Packages over £1,000 require Financial Conduct Authority authorisation, which your scheme provider holds.
Which employees are eligible?
Any employee paid through PAYE, full or part-time, provided their pay does not fall below the National Minimum or National Living Wage after the salary sacrifice.
The bottom line
For most employers Cycle to Work is a low-cost, low-effort benefit: pick a provider, set a limit that suits your team, and the salary-sacrifice mechanics do the rest. Point employees at our guide and calculator so they can see what they will save.
