The cycle to work scheme is still running in 2026 with the same salary sacrifice structure it has used since the government overhauled the rules in 2019. No cap was introduced in the 2025 Autumn Budget — despite widespread speculation in the cycling trade — and the tax relief that makes the scheme genuinely useful remains in place. For most employees, very little has changed.
The one meaningful update for the new tax year is the National Living Wage rising to £12.71 an hour from April 2026, which slightly tightens the salary floor that employers must respect when calculating how much an employee can sacrifice.
What’s actually different in 2026
The Budget cap rumour turned out to be wrong
In the weeks before the November 2025 Autumn Budget, cycle trade bodies and scheme providers flagged reports that the Treasury was considering a cap on the value of bikes purchased through the scheme. The Chancellor did not introduce one. The scheme’s tax treatment was left unchanged by the Budget — a result confirmed by Cycling Weekly and multiple provider announcements after the announcement.
National Living Wage rises to £12.71 an hour
From 1 April 2026, the National Living Wage rose to £12.71 an hour for workers aged 21 and over (GOV.UK, “LPC recommendations take the National Living Wage to £12.71”). Workers aged 18–20 receive £10.85; those under 18 or in the first year of an apprenticeship receive £8.00.
This matters because salary sacrifice cannot legally reduce your effective hourly rate below the minimum wage. If you earn just above the NMW floor, your employer may need to limit the monthly sacrifice amount or spread payments over a longer hire period to stay within the law. This is your employer’s responsibility to calculate, but it’s worth being aware of before you apply.
Income tax and employee NI rates are unchanged for 2026/27
The income tax bands are the same as the previous year. Employee National Insurance runs at 8% on weekly earnings between £242 and £967, and 2% on earnings above that (GOV.UK, “National Insurance: how much you pay”). Those rates feed directly into how much the scheme saves you — and they haven’t moved.
How much you save through the scheme in 2026
Salary sacrifice reduces your gross pay before income tax and National Insurance are calculated. You never pay either on the sacrificed amount, so your saving is the combined rate of both deductions:
| Tax band | Income tax | Employee NI (2026/27) | Total saving |
|---|---|---|---|
| Basic rate | 20% | 8% | 28% |
| Higher rate | 40% | 2% | 42% |
In practice: on a £1,000 bike, a basic-rate taxpayer pays roughly £720 net. A higher-rate taxpayer pays roughly £580. Use our cycle to work savings calculator to get the exact figure for your salary and the bike you have in mind.
Your employer saves too. Employer National Insurance — at the 2026/27 rate of 15% — isn’t due on the sacrificed salary, which is why many businesses are happy to run the scheme and promote it internally. It genuinely cuts their payroll costs.
Is there still no spending limit?
There is no government-imposed ceiling on the value of a bike. The original £1,000 threshold was a consumer-credit rule: employers could only run an in-house scheme up to that amount without Financial Conduct Authority authorisation. Since the Department for Transport updated its guidance in June 2019, FCA-authorised providers — including Cyclescheme, Green Commute Initiative, and others — can offer hire agreements at any value (GOV.UK, “Government ushers in new era of green commutes with e-bike Cycle to Work scheme”).
In practice your ceiling is set by your employer’s chosen provider and by the salary floor, not by government rules. For high-value bikes and e-bikes, our guide on the cycle to work scheme over £1,000 covers what you need to know before you apply.
Is the scheme still worth using in 2026?
For most employed commuters, yes. You get a 28–42% discount on a bike and kit you were going to buy anyway, paid monthly from your gross salary before tax. The scheme works because that money would otherwise go straight to HMRC.
Three situations where it may be less straightforward:
- You earn close to the National Living Wage. Your employer must ensure the monthly sacrifice doesn’t push your effective hourly rate below £12.71. That may cap what you can get — or require a longer hire period to keep the monthly amount small enough.
- Your employer doesn’t run the scheme. You can only access it through your employer. If yours doesn’t offer it, it’s worth asking — many providers will set up the scheme at no cost to the employer, and the employer NI saving makes it an easy yes. Our eligibility and rules guide covers the basics your employer needs to know.
- You want to own the bike immediately. Technically it’s a hire agreement; ownership transfers at or after the end of the hire period, usually 12 or 18 months. That detail matters more on a high-value bike. Read our end of hire and ownership guide before you sign anything.
For a fuller breakdown of who benefits most, see is the cycle to work scheme worth it?
Frequently asked questions
Has the cycle to work scheme changed in 2026?
No major structural changes. The salary sacrifice tax relief is identical to previous years. The 2025 Autumn Budget introduced no cap on bike values. The main practical update is the National Living Wage rising to £12.71 an hour from April 2026, which affects how much lower-paid workers can sacrifice each month.
Can I still use the cycle to work scheme for an e-bike in 2026?
Yes. Electric bikes that qualify under the UK EAPC rules — motor limited to 250W, maximum assisted speed 15.5 mph — count as cycles for the scheme. FCA-authorised providers can offer hire agreements at any value, so a high-spec e-bike is eligible provided your employer has the right provider in place.
How much does the cycle to work scheme save in 2026?
Around 28% for basic-rate taxpayers (20% income tax plus 8% employee NI) and around 42% for higher-rate taxpayers (40% income tax plus 2% NI on earnings above the upper earnings threshold). Both figures are based on the 2026/27 rates published on GOV.UK. Use our savings calculator for a personalised number.
Is there a spending limit on the cycle to work scheme in 2026?
No government cap. Since updated DfT guidance in June 2019, FCA-authorised providers can offer hire agreements at any value. Some employers set their own internal ceilings, so check with your HR or benefits team to confirm what’s available through your workplace.
