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I’d Rather Cycle

UK salary-sacrifice scheme

Cycle to Work Scheme 2026: How It Works + Savings Calculator

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Updated for the 2026/27 tax year. Rates verified against HM Treasury figures (personal allowance £12,570; basic rate 20%; higher rate 40%; employee National Insurance 8% / 2%).

What is the Cycle to Work scheme?

The Cycle to Work scheme is a UK salary sacrifice benefit. Your employer pays for a bike (and safety equipment such as lights, a helmet and a lock), and you hire it from them — typically over 12 months — with the cost taken from your gross salary. Because the deduction happens before income tax and National Insurance are calculated, you save both on the full amount.

Since 2019 there is no upper spending limit set by the scheme rules themselves: if your employer’s scheme allows it, e-bikes and cargo bikes costing several thousand pounds qualify. E-bikes are eligible; motorbikes and scooters are not. The bike should be used mainly for commuting, but normal personal use alongside that is fine.

How the scheme works, step by step

  1. Check your employer offers it. Most medium and large UK employers do, usually through one provider — Cyclescheme, Cycle2Work (Halfords) or the Green Commute Initiative. Ask HR which one, because the provider shapes where you can shop and what the end of the hire looks like.
  2. Choose your bike and equipment. Pick the bike, and add the boring essentials — lights, lock, helmet, mudguards — because they qualify for the same saving and you will buy them anyway.
  3. Apply through the provider. You request a certificate or voucher for the total value; your employer approves it and pays the provider.
  4. Sign the hire agreement and collect the bike. From this point the bike is technically hired to you, and the monthly salary deduction starts.
  5. At the end of the hire, take ownership. This is the step people worry about and it is almost always painless — the detail is in our end-of-hire guide, but in short: a small transfer payment or a free extended hire, depending on the provider.

How much do you actually save?

  • Basic rate taxpayer (income £12,571–£50,270): you save 20% income tax + 8% National Insurance = ~28%
  • Higher rate taxpayer (£50,271–£125,140): 40% + 2% = ~42%
  • Additional rate (above £125,140): 45% + 2% = ~47%

A worked example makes it concrete. Take a basic-rate taxpayer and a £1,000 bike over a 12-month hire:

  • £1,000 comes out of gross salary — about £83.33 a month before tax
  • Because that £1,000 is never taxed, you avoid £200 of income tax and £80 of employee National Insurance
  • Net cost: roughly £720, felt as about £60 a month in take-home pay — before any end-of-hire fee, which for most providers is either zero or a few percent

The saving scales with the price: the same mechanics on a £3,000 e-bike mean avoiding roughly £840 of tax and NI at the basic rate. This is why the scheme matters most for e-bike commuters.

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Who can use it — and who can’t

You need to be an employee paid through PAYE, earning enough that the deduction does not take you below the minimum wage. That excludes two groups more often than people expect:

  • The self-employed — no salary means nothing to sacrifice. There are still legitimate ways to put a bike through a business, covered in our guide for the self-employed.
  • Low earners near the wage floor — the deduction cannot take your hourly pay below the National Minimum Wage (£12.71/hour from April 2026 for over-21s), so very large bikes on modest salaries may be capped by your employer. The full rules are in our eligibility and limits guide.

If your employer does not offer the scheme at all, it costs them nothing to set up and actually saves them employer National Insurance on the sacrificed salary — our employer’s guide is written to be forwarded to HR.

Things to check before you sign up

  • Minimum wage floor: the deduction cannot take your hourly pay below the National Minimum Wage (£12.71/hour from April 2026 for over-21s), so very large bikes on modest salaries may be capped by your employer.
  • End of the hire period: you usually take ownership via a small transfer payment based on HMRC’s fair-market-value table, or extend the hire at no extra cost. Ask your provider how they handle it — and see what actually happens at the end of the hire.
  • Provider: most employers run the scheme through Cyclescheme, Cycle2Work (Halfords) or the Green Commute Initiative — each has different shops and end-of-hire arrangements. See our provider comparison for the differences that matter.
  • Leaving your job mid-hire: if you resign or are made redundant during the hire period, the outstanding balance is normally taken from your final net pay — without the tax saving. Signing up the month before you plan to leave is the one way to genuinely lose out.
  • Spending over £1,000: the old £1,000 cap is gone, but employers without a consumer-credit-exempt provider sometimes still impose it. If the bike you want costs more, our over-£1,000 guide explains the workarounds.

Scheme vs. just buying the bike

A fair question: with bike shops discounting hard, is salary sacrifice still the better deal than simply buying a discounted bike outright? Usually yes, for one structural reason — the scheme’s saving stacks on top of the shop price, because the certificate pays whatever the retailer charges. A 28% tax saving on a sale-price bike beats the sale price alone. The honest exceptions:

  • Retailer restrictions: some shops exclude sale items from scheme purchases or cap their discount when paying by certificate, because providers charge the shop a commission. Always confirm the shop honours the price you see before applying.
  • You need the bike today: approval takes days to weeks depending on your employer’s sign-up windows; a sale ends when it ends.
  • You might change jobs soon: the outstanding balance leaves your final pay without the tax saving, erasing most of the benefit.
  • Second-hand is on the table: the scheme is new-bikes-only, and a good used bike can undercut even a 47% saving — see how to buy a used bike well.

Common questions

Is the Cycle to Work scheme actually worth it?

For almost everyone paid through PAYE who wants a bike anyway: yes — it is one of the few salary sacrifice benefits with no real downside if you stay in your job through the hire period. The honest edge cases (heavy discounts elsewhere, imminent job changes) are covered in is the scheme worth it?

Can I get an e-bike on the scheme?

Yes. E-bikes are fully eligible, and since 2019 there is no scheme-side price cap. See the UK e-bike buyer’s guide for what to look for.

Do I have to ride it to work every day?

No. The rules say the bike should be used mainly for commuting or work journeys, but nobody audits your mileage, and normal leisure use alongside commuting is expected and fine.

Can I use the scheme for a second-hand bike?

No — scheme certificates are for new bikes from participating retailers. If your budget points second-hand, our used bike guide covers how to buy well without the scheme.

What about accessories only, without a bike?

Most providers allow certificates for safety equipment alone — lights, locks, helmets, mudguards, bags. Same tax mechanics, same savings.

Does it affect my pension or other benefits?

Salary sacrifice lowers your gross pay, which can slightly reduce pension contributions based on it, and matters if you are near a threshold for benefits such as statutory maternity pay. For a 12-month hire on a typical bike the effect is small, but it is worth a minute of thought if you are close to a threshold.

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