The length of your Cycle to Work hire term changes how much leaves your payslip each month. It does not change how much tax and National Insurance you save. A £1,000 package sacrificed over 24 months costs a basic-rate taxpayer the same in total as one sacrificed over 12 months; it is simply split into smaller pieces. What the longer term does change is how long you are tied in, what you owe if you leave early, and which options you have at the end.
The other thing to know straight away: you don’t usually pick the term. Your employer decides which terms are on offer, and you choose from that list. New to the scheme? Start with our Cycle to Work scheme guide.
Why the term doesn’t change your tax saving
Cycle to Work runs on salary sacrifice. You give up part of your gross pay, before income tax and National Insurance are taken, and your employer hires you the bike in return. The saving is the tax and NI you would otherwise have paid on that slice of salary. Our guide to how Cycle to Work salary sacrifice works goes through the mechanics.
For 2026/27, GOV.UK’s income tax rates page puts the basic rate at 20% and the higher rate at 40% (England, Wales and Northern Ireland; Scotland sets its own bands). The National Insurance rates for the same year are 8% on the main band and 2% above the upper earnings limit for most employees. That gives a combined saving of roughly 28% for a basic-rate taxpayer and 42% for a higher-rate taxpayer.
Those percentages apply to the total amount sacrificed. Twelve deductions of £83.33 and twenty-four deductions of £41.67 both come to £1,000 of gross pay (give or take a penny of rounding), so both save the same tax and NI, provided your earnings stay in the same band throughout.
What each term looks like on a £1,000 package
Here is a £1,000 package (bike plus accessories) spread across the four terms people ask about most. “Net cost” is what you actually lose from take-home pay after the tax and NI saving, using the combined rates above.
| Term | Gross sacrifice per month | Net cost per month (basic rate, ~28% saving) | Net cost per month (higher rate, ~42% saving) |
|---|---|---|---|
| 12 months | £83.33 | £60.00 | £48.33 |
| 18 months | £55.56 | £40.00 | £32.22 |
| 24 months | £41.67 | £30.00 | £24.17 |
| 36 months | £27.78 | £20.00 | £16.11 |
| Total, any term | £1,000 | £720 | £580 |
The bottom row is the point. Whichever term you take, a basic-rate taxpayer pays £720 for £1,000 of kit and a higher-rate taxpayer pays £580. The figures are rounded illustrations, not a payslip. Your real numbers depend on your pay, your tax code, any change of band during the hire, and your provider’s own terms. For a figure based on your salary, our Cycle to Work savings calculator guide walks through it, and if you are close to the £50,270 or £100,000 thresholds read our page on savings for higher-rate taxpayers.
Who decides the term
The Department for Transport’s Cycle to Work scheme guidance for employers says schemes typically run for 12 or 18 months, and that the salary sacrifice arrangement is typically for at least 12 months. It also separates two things that are easy to mix up: the salary sacrifice period (how long deductions come out of your pay) and the hire agreement (how long you hire the bike). They don’t have to be the same length.
Within those norms, the employer sets the options. In practice that looks like this:
- Cyclescheme. Cyclescheme’s retail partners, such as Giant, state that the standard period for a Cyclescheme certificate is 12 months and that some employers offer 6, 18 and 24-month schemes. They add that you will need to check with your employer.
- Halfords Cycle2Work. The University of Reading’s Cycle2Work page gives staff two employer codes, one for a 12-month and one for an 18-month salary sacrifice. That is one employer’s set-up, but it shows how the choice reaches you: through a code your employer has arranged. We found no Halfords Cycle2Work source offering a 36-month term. More on how Halfords’ scheme works in our Halfords Cycle2Work guide.
- Green Commute Initiative. GCI’s briefing document says the salary sacrifice period runs for a minimum of three months and up to 60 months, with typical terms of 12 to 36 months, and that the employer advises employees of the terms available. If you have seen “36 months” mentioned, GCI is the provider that documents it. Our GCI explainer covers the rest of the scheme.
- Bike2Work and others. We did not find a term list published by Bike2Work itself, so treat whatever your employer’s portal shows as the answer for you.
Some employers tie the term to the package value. West Midlands Ambulance Service’s Cycle to Work page, for example, says spends of up to £1,000 come out of salary over 12 months, with higher spends up to its £3,000 limit spread over 24 months. Others simply widen the choice: East Sussex County Council’s Governance Committee report (meeting of 18 July 2023) proposed moving from a single 12-month repayment period to a maximum of 24 months, with 18 months also available. For a side-by-side look at the main providers, see Cyclescheme vs Cycle2Work vs GCI.
When a longer term makes sense
The monthly figure is the real constraint. If £60 a month out of take-home pay is too much but £30 is fine, a 24-month term gets you the same bike at the same total cost. That is the main reason longer terms exist.
You are on or near the minimum wage. The DfT guidance is clear that a salary sacrifice must not take pay below the National Minimum Wage or National Living Wage. From 1 April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over. If a 12-month sacrifice would breach that floor, the guidance lists a longer than usual hire period, or a lower value package, as options the employer can offer. The East Sussex report gives this same reason for introducing longer terms.
The package is expensive. Packages above £1,000 are allowed where the employer or provider has the right permissions (see our guide to Cycle to Work over £1,000). On an e-bike or cargo bike, a 12-month term can mean a large monthly deduction, which is why some employers, like the ambulance service above, attach longer terms to bigger packages.
What a longer term costs you in other ways
The tax saving is the same, but a longer term is not free.
Leaving your job. The DfT guidance says that if you leave during the salary sacrifice period, your employer may ask you to cover the costs it has not yet recovered. Over 24 or 36 months there is more time for your plans to change, and at any point mid-term there is usually more left to pay than on a shorter term. If you expect to move jobs in the next two years, that is worth weighing before you take the longer option.
Pension contributions. Salary sacrifice reduces your gross pay, and with some pension schemes that reduces what goes in. A longer term spreads a smaller reduction over more months; the overall effect depends on how your scheme calculates contributions. Our salary sacrifice guide explains what to ask HR.
Changes of tax band. The equal-total rule only holds if your band stays the same. A pay rise that pushes you into the higher rate partway through means later deductions save more; a drop in hours does the opposite. Over 36 months that is more likely to happen than over 12.
Hire agreements over 18 months. Under the DfT guidance, if the hire agreement lasts more than 18 months you have a statutory right to end it under section 101 of the Consumer Credit Act 1974. That is a protection rather than a cost, but it signals that longer hires sit under different rules. Read the agreement your provider sends you.
Does a longer term change what you pay at the end?
You don’t own the bike during the hire. What happens afterwards depends on your provider, and our guide to Cycle to Work end of hire covers the options in detail.
The term matters here because of the bike’s age. If you buy it at the end of the hire, HMRC expects a price close to its fair market value. Annex C of the DfT guidance sets out values HMRC accepts, as a percentage of the original price including VAT:
| Age of cycle | Original price under £500 | Original price £500+ |
|---|---|---|
| 1 year | 18% | 25% |
| 18 months | 16% | 21% |
| 2 years | 13% | 17% |
| 3 years | 8% | 12% |
| 4 years | 3% | 7% |
| 5 years | Negligible | 2% |
| 6 years and over | Negligible | Negligible |
So a bike bought at the end of a 24-month hire has a lower accepted value than one bought at 12 months. Some providers don’t ask for that payment at all: they offer an extended hire instead, with ownership passing later for a small fee. GCI’s briefing, for example, describes a free extended loan until the bike is six years old, then ownership for £1. Cyclescheme’s routes are in our Cyclescheme ownership options guide, and Halfords’ in Halfords Cycle2Work end of hire. Check which route your provider uses before you assume a longer term saves you anything at the end.
How to choose between the terms on offer
- Find out what’s actually available. Your benefits portal or HR team will list the terms, and sometimes they depend on the package value.
- Work out the monthly net cost. Take the package price, divide by the number of months, and subtract roughly 28% (basic rate) or 42% (higher rate). Choose the shortest term whose figure you’re comfortable with.
- Think about your job plans. If you might leave during the term, check what you would owe and how it is collected.
- Check the end-of-hire route. Fair market value, extended hire or return: the term changes how that plays out.
- Take tax questions to a professional. This page explains how the scheme works; it isn’t personal tax advice.
Frequently asked questions
Is 12 months cheaper than 24 months on Cycle to Work?
Not in total. The tax and National Insurance saving comes from the amount you sacrifice from gross pay, not from how long it takes. If your tax band stays the same, a £1,000 package costs the same in total over 12 or 24 months; the longer term only spreads it into smaller monthly deductions.
Can I choose my own Cycle to Work hire term?
Only from the options your employer has set up. Some employers offer a single 12-month term, others give a choice of 12, 18 or 24 months, sometimes depending on the package value. Your HR or benefits team will tell you which terms apply to you.
Does Halfords Cycle2Work offer 36 months?
We could not find a Halfords Cycle2Work source offering 36 months. Employer pages we checked describe 12-month and 18-month salary sacrifice options. Green Commute Initiative is the provider whose own briefing describes terms up to 60 months, with 12 to 36 months typical.
What happens if I leave my job during a long hire term?
Government guidance lets employers ask you to cover the costs they have not recovered if you leave during the salary sacrifice period. On a longer term there is usually more left to pay at any given point, so check your agreement before you choose it.
