How to save money on a bike with a Cycle to Work scheme

A Cycle to Work scheme is designed to promote healthier journeys to and from work and reduce pollution by allowing employees to save money on a new bike and/or accessories. The initiative was first introduced by the government in 1999 and many thousands of people have benefited ever since. You might well be able to join them.

The good news is that getting a bike through a Cycle to Work scheme is much simpler than you might think.

How does it work?

Your employer can run its own scheme but most register with a Cycle to Work scheme provider, such as Cyclescheme. You choose your new bike and/or accessories and get a voucher that covers the cost. You then spend that voucher on whatever you've selected and start making monthly hire payments for it over a fixed period – usually a year.

Find out how to commute by bike

Cycle to Work is a 'salary sacrifice' benefit. What does that mean? You make a saving by paying for the bike and/or accessories directly from your gross salary (before tax). You sacrifice part of your salary, temporarily lowering your income slightly. Your income tax and national insurance are based on the lower figure, so the amount you pay is less.

During the hire period, the bike and/or accessories are technically on loan to you. If you want to keep them – and you probably will – you'll usually have the option of paying an ownership fee at the end of this period. According to the rules and regs, the final fee will be the 'fair market value' of the used bike and/or accessories – a fraction of the original price. 

If you opt to pay the ownership fee at the end of a 12-month loan period, your savings will be relatively small. That's because the fair market price of a bike originally costing less than £500 is calculated at 18% of that initial figure after a year, while it's 25% for a bike with an original price of over £500. 

Cycle to Work scheme providers allow you to lease the bike and accessories for longer than that so the final fee is lower (see below, How much will I save?).

After four years, the fair market price is just 3% of the original price for sub-£500 bikes and 7% for bikes originally costing over £500. That means that you'd pay an ownership fee of just £12 on a £400 bike, for example, and £70 on a £1,000 bike.

Am I eligible?

You enter a Cycle to Work scheme through your employer. You're not eligible if you're unemployed or self-employed. 

Employers of all sizes can implement a scheme for their employees.

Here's the Department for Transport's Cycle to Work scheme implementation guidance.

How much can I spend?

As much as you like. In mid-2019 the Department for Transport changed its guidance on the scheme to make it clear that any Cycle to Work scheme provider registered with the Financial Conduct Authority could provide a bike of any value. The department claimed this was to enable the purchase of e-bikes via the scheme, but larger employers registered with the Financial Conduct Authority (FCA) had been providing bikes over £1,000 for years.

Check out the best commuter bikes 2023

The Green Commute Initiative is a Cycle To Work scheme provider that has offered bikes with no £1,000 limit since 2016; now all FCA-authorised providers do so, and that's basically all of them.  

How much will I save?

The amount you save depends on the cost of your bike and/or accessories and the rate of tax you pay.

As an example, Martin has a salary of £25,000 a year and opts for an £800 bike, a helmet priced £50 and other accessories of £150 – a total of £1,000. His combined monthly hire payments and final ownership fee – if it becomes his after four years – will total £750, a saving of 25%.

If Jane earns £55,000 a year and gets the same bike, helmet and accessories, she'll end up paying £650 all in; a 35% saving. This difference is simply down to the fact that the tax and national insurance savings she'll make are greater because she's a higher earner. 

What bike and equipment can I get?

You can get any type of bike you like. It doesn't have to be designed especially for commuting. It can be a road bike, mountain bike, gravel bike, even an electric bike. Tricycles and other cycles are covered too.

Find out all about electric bikes on ebiketips

You can also get cyclists' safety equipment. Although this is not defined precisely, it covers pretty much all accessories you're likely to need for cycling to and from work, including helmets, lights, mudguards, locks, pumps, tools and reflective clothing. You can get a backpack or a luggage carrier and panniers, the rationale being that they allow you to carry things safely.

You won't get away with aero bars or a power meter because describing either as safety equipment would be a stretch too far!

Do I have to ride to work every day?

No, but you need to use the bike and accessories 'mainly' for journeys between home and work, or part of those journeys, or for journeys between one workplace and another.

That said, no one is going to make you log your mileage. You are free to use the bike in your leisure time, so you can head off along the canal towpath in the evening, ride a sportive at the weekend, or take it away on holiday with you.

What if I leave my job?

If you leave your job or are made redundant during the hire period, you'll no longer be riding your bike to your original workplace so you're not eligible for further tax savings. Outstanding payments will be taken from your final salary.

These must be made from your net pay (your take-home pay) rather than your gross pay."If you are on a 12-month scheme and have had four salary sacrifice repayments taken from gross salary prior to leaving employment, the remaining eight should be taken from your final net salary," says Cyclescheme. 

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"If you have benefited from tax and national insurance savings you are still likely to be liable for your ownership payment. However, because you should never pay more than the RRP for the bike we may be able to waive the ownership payment if fewer than one month's worth of salary deductions have been taken for certificates under the value of £500, or if fewer than three months of salary deductions have been taken for certificates equal to, or over the value of, £500 have been taken before you leave employment."

How do I start?

• Find out whether your employer is registered with a Cycle to Work scheme provider. If they're not, encourage them to do so.

• Select your bike and/or accessories from a participating retailer and obtain a quote.

• Ask your employer for a voucher to cover the cost, and salary sacrifice details.

• Spend the voucher at the relevant bike retailer and receive the bike and/or accessories.

• Your salary sacrifice repayments will begin on your next payday.

Cycle to Work scheme user: Kate Lawrence

Glasgow-based physiotherapist Kate Lawrence, 48, got a bike through Cycle to Work scheme provider Cyclescheme. 

With a keen cycling dad, she was used to bikes as a youngster, but it was only after the birth of her second child that she decided to get back in the saddle as an adult. Now, though, she’s a committed commuter come rain or shine — which in Glasgow, more often than not means rain. We spoke to her about how it's going.

Do you remember doing anything ‘wrong’ in those early days after getting back on your bike?

I suppose I overdressed initially. You forget how quickly you can overheat, especially as there is nowhere in Glasgow that doesn’t have significant hills. Also, on some of those hills, I just didn’t have the fitness and the strength so there were a couple of times that I literally keeled over sideways because I couldn’t go fast enough to maintain my balance! That’s very embarrassing in commuter traffic.

Were you using clipless pedals at the time?

No, I’ve used clipless pedals a few times but I don’t really get on with them. I think for cycle commuting they’re not that useful because you’re stop-starting so often. I do have half and half pedals, though, and I have used the clipless function for rides above 10 miles and not in lots of traffic.

If you don’t use clipless pedals, how do you get up those Glasgow hills?

I think you just develop a sense of gauging the hill. If it looks short enough and you hit it at speed, perhaps after a descent, you think: ‘Right, I’m going to stay in a high gear and absolutely pump it.’ But then there are other hills where those aren’t good tactics and you need to get in the right gear earlier and work your way up.

How do you cope with rainy days?

In the summer I still wear cycle shorts and just wipe down my legs when I arrive. I keep meaning to get cycle overshoes but instead I have a dry pair of shoes and my uniform at work, and hope my grotty cycle trainers dry out enough for the return journey. The rain can be so bad here that I sometimes need dry underwear for work as well! At least once a year the roads will flood because the drains get clogged up with leaves — the water will be halfway up a bike’s wheels. On those days I love the fact I’m on a bike because cars end up getting flooded and have to be abandoned while I can keep going, albeit with a little care.

What is your best bit of kit?

Probably my Altura cycling jacket — that is easily my most useful bit of kit with our weather. This year my daughter also treated me to a Proviz Reflect 360 backpack and I’ve got some completely reflective mudguards, those are really good, too. When my kids were younger, the Croozer Kid for 2 trailer was by far my favourite cycling item. I was sad when my youngest outgrew it. Without kids, it could handle an entire week’s shopping! Quality really pays for an item you use daily, and I used it so much I wore out at least one set of tyres.

What health benefits have you noticed from commuting?

In the first year I lost about 9lb, which doesn’t seem a lot but I really wasn’t trying to lose weight. Cardio-wise I am way ahead of where I was, and I’ve started to see muscles where I’ve never seen muscles before — even on my upper body. I don’t do upper-body workouts, but the strength you get from load bearing and pushing and pulling on the handlebars has an effect.

What has been your worst commuting experience?

Hitting black ice downhill on a corner was bad: my knees hit the road, my body whiplashed forwards and I cracked the front of my helmet. And then, a week later I discovered I was pregnant! He’s eight years old now, so that all worked out fine.

What advice do you have for new commuters?

There will be wobbles and setbacks, so be brave and stick at it. Keep setting yourself little goals — look for things you might not be able to do yet but you might be able to do in time. That will add to your sense of self-confidence and achievement and provide benefits that go well beyond simply fitness.

Factfile

Name Kate Lawrence

Lives Glasgow

Occupation Physiotherapist

Commute I cycle nearly four miles each way on my commute — one mile with my children to their school, then another three miles to work.

Frequency Every day

Cyclescheme bike I’ve actually got two bikes through Cyclescheme: my first is an Eastway FB3.0 and the newest is a Merida Speeder 300.

Why I started cycling I cycled a lot as a child with my father. Then I had a long hiatus when I moved to Glasgow — as a student I just didn’t think about bringing my bike over — but I got back into cycling in my late 30s.

 

Thanks to Cyclescheme for help compiling this article.