A basic rate taxpayer saves around £280 on a £1,000 bike through the cycle to work scheme — 28p for every pound spent. Higher rate taxpayers save up to 42%. Use the calculator below to find the figure for your salary and the bike you have in mind, then read on to see exactly how those numbers are reached.
How the cycle to work scheme calculator works
The scheme runs as a salary sacrifice: your employer pays for the bike (or arranges the hire agreement through a provider such as Cyclescheme or Green Commute Initiative), and you repay them by giving up an equivalent portion of your gross salary over an agreed period — usually 12 months. Because you never receive that salary as taxable pay, you don’t owe income tax or National Insurance on it.
The calculator above takes the bike value you enter, applies the tax and National Insurance rates for your income band, and shows you the net cost after the saving plus the monthly hire amount that will appear on your payslip. If you’re already with a named provider such as Cyclescheme, they have their own calculator on their website once you’re enrolled; our tool here gives you a provider-neutral estimate upfront so you can see whether the scheme makes financial sense before committing.
For a full explanation of how the scheme works — eligibility, providers and the end-of-hire process — see our complete cycle to work guide.
Your tax band and what you save
The saving comes from two sources: income tax and National Insurance. Both are calculated at your marginal rate on the amount you sacrifice. Based on HMRC rates for the current tax year (6 April 2026 to 5 April 2027):
| Tax band | Income range | Income tax rate | Employee NI rate | Total saving |
|---|---|---|---|---|
| Basic rate | £12,571 – £50,270 | 20% | 8% | 28% |
| Higher rate | £50,271 – £125,140 | 40% | 2% | 42% |
The National Insurance figures reflect the Class 1 employee rates: 8% on earnings between the Primary Threshold and the Upper Earnings Limit (up to £967 per week in 2026/27), and 2% above that limit. Higher rate taxpayers typically earn above the Upper Earnings Limit, so the NI saving on the sacrificed amount is 2% rather than 8% — but the higher income tax rate more than compensates for this.
Sources: GOV.UK National Insurance rates; GOV.UK income tax rates. These rates apply for 2026/27 and are reviewed each April.
Worked examples: £500, £1,000 and £2,000 bikes
The table below shows the estimated saving and net cost at three common price points. Figures assume the full hire value is within scope of your scheme and that the hire period is 12 months.
| Bike value | Basic rate saving (28%) | Net cost (basic rate) | Higher rate saving (42%) | Net cost (higher rate) |
|---|---|---|---|---|
| £500 | £140 | £360 | £210 | £290 |
| £1,000 | £280 | £720 | £420 | £580 |
| £2,000 | £560 | £1,440 | £840 | £1,160 |
These are estimates based on current HMRC rates. Your actual saving may vary if your salary changes during the hire period, if your employer’s scheme uses a slightly different cost structure, or if the package includes accessories valued differently. Bike prices shown are examples only — always check current prices directly with the retailer.
For a more detailed look at whether the saving justifies the commitment, see our article on whether the cycle to work scheme is worth it.
The National Minimum Wage cap
Salary sacrifice cannot reduce your post-sacrifice pay below the National Minimum Wage (NMW) or National Living Wage (NLW). If you earn close to the minimum — particularly if you work part-time or on a lower hourly rate — your employer must limit the monthly hire amount or spread it over a longer period to stay within the rules.
In practice this only affects employees on lower hourly rates or those working reduced hours. If you’re unsure whether this applies to you, your employer’s HR team or the scheme provider will calculate the maximum amount you can sacrifice before asking you to sign the hire agreement. The full eligibility rules, including who qualifies and what counts as salary for sacrifice purposes, are covered in our cycle to work eligibility and limits guide.
What the calculator doesn’t cover: end-of-hire fees
The saving shown in the calculator is the hire cost — the amount you sacrifice from your gross salary. At the end of the hire period (normally 12 months), ownership of the bike does not transfer automatically. You’ll typically choose between extending the hire, returning the bike, or paying a fair market value (FMV) fee to own it outright.
HMRC publishes guidance on the FMV percentages based on the bike’s original value and its age. For a £1,000 bike held for one year, the FMV fee is typically around 25% (£250), which still leaves the basic rate taxpayer well ahead of buying at full retail. Our cycle to work end of hire guide covers these fees in full, including the HMRC-approved percentage table for different values and hire lengths.
Frequently asked questions
How much do you save on the cycle to work scheme?
The saving depends on your income tax band. A basic rate taxpayer saves 28% of the bike’s value (20% income tax + 8% National Insurance). A higher rate taxpayer saves 42% (40% income tax + 2% NI above the Upper Earnings Limit). On a £1,000 bike, those figures are £280 and £420 respectively, based on HMRC 2026/27 rates.
Is there a maximum value for a cycle to work bike?
There is no upper limit for FCA-authorised scheme providers. The original £1,000 cap — which applied under standard consumer hire regulations — was removed in June 2019 for providers who obtained FCA authorisation. You can now put a high-value e-bike or commuter bike worth several thousand pounds through the scheme with an FCA-authorised provider such as Cyclescheme or Green Commute Initiative.
How is the cycle to work saving calculated?
The scheme works via salary sacrifice: you agree to give up a portion of your gross salary equal to the bike’s hire cost. Because that amount is never paid to you as cash, neither income tax nor National Insurance is due on it. The saving is the tax and NI you would otherwise have paid, calculated at your marginal rates for the current tax year.
Can higher rate taxpayers use the cycle to work scheme?
Yes, and they save more in absolute terms — 42% versus 28% for basic rate taxpayers. The higher income tax rate (40%) on the sacrificed amount more than offsets the lower NI saving (2% above the Upper Earnings Limit). On a £2,000 bike, a higher rate taxpayer saves £840 compared with £560 for a basic rate taxpayer.
Does the cycle to work scheme cover e-bikes?
Yes, provided the e-bike meets UK EAPC rules: a motor no larger than 250W and assisted speed capped at 15.5 mph (25 km/h). Most pedal-assist commuter e-bikes meet these requirements and can be purchased through the scheme at full value. Check the list of eligible products with your chosen provider before ordering.
