Cycle to Work Scheme: 10 things you need to know

Cycling improves your health, helps the environment, and saves you money on fuel and transport costs. With the expansion of cycling infrastructure across the UK and the growing focus on sustainable commuting, there's never been a better time to consider cycling to work.

If you want to get pedalling but your old bike is past its best and you can't afford a new one, the Cycle to Work Scheme could be the perfect solution.

What is the Cycle to Work Scheme?

The Cycle to Work Scheme is a UK government tax incentive aimed at encouraging employees to cycle to work. It allows you to hire a new bike and accessories through your employer, spreading the cost over time while saving on tax.

👉Here's how it works: your employer buys a bike and equipment on your behalf, and you pay them back through monthly salary deductions, before tax is applied. This creates a win-win situation – you get a new bike without a large upfront cost, and you save money through tax benefits.

10 key things to know about the scheme in 2025

🚲 1. You can save up to 47% on the cost of a new bike

Through the tax benefits, most people save between 25-40% on the overall cost of their new bike and equipment. The exact amount depends on your tax bracket:

•  Basic rate taxpayers typically save about 32%
•  Higher rate taxpayers can save around 42%
•  Additional rate taxpayers may save up to 47%

These savings are possible because the payments come out of your salary before tax and National Insurance (NI) are calculated.

🚲 2. There's no longer a price cap on bikes

Since 2019, there's been no £1,000 limit on the scheme. This means you can choose any bike that suits your needs – from a basic commuter bike to a high-end road bike or even an electric bike. The only limitation might be any maximum value set by your employer or scheme provider.

Electric bikes (e-bikes) have become increasingly popular under the scheme, offering an excellent option for longer commutes or hillier routes.

🚲 3. You can include accessories in your package

The scheme covers more than just the bike itself. You can include essential accessories such as:

• Helmets and safety gear
• Locks and security equipment
• Lights and reflective clothing
• Panniers and bike bags
• Cycle-specific clothing
• Maintenance items like pumps and repair kits

This means you can get fully equipped for safe, comfortable commuting in one package.

🚲 4. You don't have to use the bike exclusively for commuting

While the bike should be used mainly for commuting to work, the Department for Transport guidelines state you only need to use it for commuting purposes at least 50% of the time. This means you're free to use it for leisure rides, shopping trips, or weekend adventures for the other 50%.

🚲 5. Most major employers offer the scheme

The scheme has grown significantly since 2020, with the vast majority of large and medium-sized employers now participating. If your employer doesn't currently offer it, it's worth asking them to consider it – the process is straightforward for companies to set up, and they benefit from NI contribution savings too.

🚲 6. There are multiple scheme providers to choose from

While your employer will select the provider, the major ones operating in 2025 include:

• Bike2Work Scheme
• Cyclescheme
• Cycle Solutions
• Evans Cycles Ride-to-Work
• Green Commute Initiative
• Halfords Cycle2Work

Each provider works with different retailers, so the bikes available to you will depend on which provider your employer uses.

🚲 7. The repayment period is typically 12-18 months

Most employers set up the scheme with 12-month repayment periods, though some now offer 18-month options for higher-value bikes. The payments are deducted automatically from your salary each month, making budgeting simple.

🚲 8. You have several options at the end of the hire agreement

When your initial hire period ends, you'll usually have a few different options:

• Pay a small final payment to own the bike outright (typically 7% of the original value for bikes under £500, or 3% for bikes over £500)
• Return the bike to the scheme provider
• Extend the hire agreement for a nominal fee (often for 36 months), after which ownership typically transfers to you for free or a minimal cost

The exact options will depend on your scheme provider, but most people choose to keep their bikes after the initial period.

🚲 9. Leaving your job during the scheme requires settling the agreement

If you leave your job before completing the repayment period, you'll usually need to pay the remaining balance from your final salary. This payment would be the full remaining amount without tax advantages. Check your specific scheme's terms and conditions regarding early termination.

🚲 10. The scheme can benefit employers too

Your employer also gains advantages from offering the scheme:

• They save on employer National Insurance contributions (13.8% on the salary sacrificed)
• It promotes employee health and wellbeing, potentially reducing sick days
• It helps meet corporate sustainability goals
• It's a valuable employee benefit that improves recruitment and retention

How to sign up for the Cycle to Work Scheme

Getting your new bike through the scheme is straightforward:

1. Check eligibility - Confirm your employer offers the scheme and that you're eligible (you must be paid through PAYE)

2. Select your retailer - Find out which bike shops work with your employer's scheme provider

3. Choose your bike - Visit in person or browse online to select your bike and accessories

4. Apply - Complete the application through your employer's scheme provider

5. Get approval - Wait for your employer to approve your application

6. Collect your bike - Once approved, you'll receive a voucher or certificate to collect your new bike

7. Start saving - Your monthly repayments will begin from your next pay period

Is the Cycle to Work Scheme worth it?

With rising transport costs and growing awareness of health and sustainability, the Cycle to Work Scheme offers great value.

It’s especially worthwhile if you:

• Commute regularly and want to save money
• Want to get fitter
• Are looking to reduce your carbon footprint
• Would like a better-quality bike than you could afford upfront

Final note: Just remember — the scheme still reduces your take-home pay, so make sure the monthly repayments fit your budget.