Key figures (2026/27)

• Between £100,000 and £125,140, every £1 sacrificed through Cycle to Work saves 62p in income tax and National Insurance in England, Wales and Northern Ireland.
• In Scotland, every £1 sacrificed through Cycle to Work between £100,000 and £125,140 saves 69.5p.
• In the £100,000 to £125,140 band, a bike through Cycle to Work costs 38p in the pound, against 72p for a basic rate taxpayer.
• A parent on £104,000 who hires a £4,500 e-bike through Cycle to Work can be around £5,370 better off once funded childcare hours in England return.
• The personal allowance and income tax thresholds are frozen until April 2031, so more earners are entering the 60% band each year.

The below is our view, not tax or financial advice, and should not be relied upon as such. Figures use 2026/27 rates.

About the author: Jamie Milroy is Founder and CEO of DASH, the FCA-authorised Cycle to Work platform used by organisations including the Financial Times, Deliveroo, Lovable and several NHS trusts. A chartered accountant (ACA, ICAEW) by training, formerly of PwC, he leads DASH's work on Cycle to Work, salary sacrifice and the tax treatment of employee benefits and remuneration. He is a member of Reward Strategy's Partner 75, recognising excellence within the pay and reward industry, speaks regularly on Cycle to Work and employee benefits, and has been quoted in outlets including The Times and City AM.

Introduction

If you earn between £100,000 and £125,140, every £1 of salary you sacrifice for a bike or eligible item through Cycle to Work saves you 62p: 40p of income tax, 20p from the personal allowance you win back, and 2p of National Insurance. In Scotland, it saves you 69.5p. Therefore, if your salary has just gone over £100,000, you’re now paying a higher marginal rate than someone on £500,000.

If your chosen salary sacrifice takes you back under £100,000, it can restore your family's funded childcare. For many parents this is worth more than the bike, consequently, in effect you are paid to cycle to work.

What is the 60% tax trap?

The 60% tax trap is the income band between £100,000 and £125,140, where the personal allowance is withdrawn and the effective marginal rate rises to 62% in England, Wales and Northern Ireland. A Cycle to Work salary sacrifice in this band saves tax at the same 62% rate.

Once your adjusted net income passes £100,000, your personal allowance goes down by £1 for every £2 above it. By £125,140, the £12,570 allowance has gone entirely.[1]

Adjusted net income is your total taxable income before personal allowances, minus certain reliefs such as grossed-up pension contributions and Gift Aid donations. Salary sacrificed through Cycle to Work is never paid to you, so it does not count towards adjusted net income.

Each extra £1 earned between £100,000 and £125,140 costs 40p in higher rate tax, plus another 20p because 50p of previously tax-free income is now taxed at 40%. Add 2p of employee National Insurance, and the marginal rate is 62%.[2]

Cycle to Work salary sacrifice works in reverse: every £1 sacrificed between £100,000 and £125,140 saves the full 62p. The personal allowance and thresholds are frozen until April 2031, so fiscal drag is pulling more earners into the £100,000 to £125,140 band every year.[3]

What that means for the price of a bike

Cycle to Work saves 62p in every £1 sacrificed between £100,000 and £125,140 in England, Wales and Northern Ireland, and 69.5p in Scotland, so a bike costs 38p or 30.5p in the pound.[4] The saving at other income levels, combining income tax and employee National Insurance, is lower.

England, Wales and Northern Ireland

Scotland

On a £4,000 e-bike hired through Cycle to Work and sacrificed entirely between £100,000 and £125,140, the take-home cost is £1,520 in England, Wales and Northern Ireland, and £1,220 in Scotland.

The 62% saving only applies to the part of a Cycle to Work sacrifice that comes off income between £100,000 and £125,140. Sacrifice £10,000 from a £105,000 salary, and the first £5,000 saves 62% while the remaining £5,000 saves 42%.

The childcare cliff edge: where Cycle to Work pays you

If either parent's adjusted net income is more than £100,000, the family loses two things:

• Funded childcare hours in England: up to 30 hours a week, 38 weeks a year, for working parents of children from nine months to school age. Parents of three and four year olds keep the universal 15 hours, so they lose half.[5]
• Tax-Free Childcare: a government top-up worth up to £2,000 per child per year (£4,000 for a disabled child).[6]

There is no taper. £1 over the line and the support goes. So a £1,000 pay rise can leave a family thousands of pounds worse off, which is why a salary sacrifice that brings income back under £100,000 can be worth far more than the tax it saves.

A worked example. A parent earns £104,000 and has an 18-month-old at nursery 25 hours a week.

• They hire a £4,500 e-bike through Cycle to Work, with the whole sacrifice falling in one tax year. Their adjusted net income drops to £99,500.
• Their take-home pay falls by £1,810: the first £4,000 of the sacrifice saves 62%, and the last £500, below £100,000, saves 42%.
• The funded hours come back. Without them, a 25-hour nursery place for an under-two costs an average of £189 a week in England, according to the Coram Childcare Survey 2026. With them, it can be free during term time: about £7,180 a year over 38 weeks.[7]
• They are around £5,370 better off, before any Tax-Free Childcare on holiday weeks, and they have a £4,500 e-bike.

London prices are higher: an average of £238 a week in inner London and £217 in outer London, according to Coram.[7] That takes the gain to around £7,230 and £6,430.

What about paying more into a pension?

Paying more into your pension also reduces adjusted net income, and it is the standard advice for getting under £100,000. If getting under the line is the only goal, a pension does the job, and Cycle to Work is no reason to buy a bike you won't ride.

The point is that if you have been thinking about cycling to work, this band gives you a bigger incentive to try it than almost anyone else gets. A bike costs you 38p in the pound, against 72p for a basic rate taxpayer, and it can bring back your childcare too. You feel the benefit now rather than in your late 50s, and the bike can replace part of what you already spend on getting to work.

Cycle to Work is also untouched by the salary sacrifice cap announced in the November 2025 Budget, which applies to pension contributions from 2029.[8] For many parents, the right answer is both.

Timing the sacrifice to the right tax year

The childcare test looks at your expected adjusted net income for the tax year, and you reconfirm eligibility every three months. A sacrifice only helps if it falls in the tax year that matters.

Cycle to Work is more flexible here than most people assume. HMRC's usual 12-month threshold for salary sacrifice, at EIM42767, guards against the benefit being taxed as money's worth. Its own guidance at EIM42760 and EIM42755 confirms that can't happen with cycles, which are exempt from income tax altogether, so a Cycle to Work sacrifice still works over less than 12 months.[9][10] That gives you two levers:

• Faster deductions. The hire stays the same length, but you can agree with your employer to bring the deductions forward, so more of the sacrifice falls in the current tax year.
• Uneven deductions. You can agree with your employer to sacrifice more in some months than others, provided each change is agreed in advance, before the pay it affects is earned.

DASH adds two more. Every DASH employer runs the scheme on an anytime basis, so there is no annual window to wait for: you can start a hire in February. And you can use DASH more than once in a year, so a second hire can top up the sacrifice if your income moves. Additionally, DASH subscriptions and bike share options offer individuals more flexibility when using the cycle to work scheme for tax advantages.

Watch for anything else that moves your income, such as a bonus, a pay rise or savings interest. Adjusted net income counts all of it, so it's sensible to allow a buffer if the childcare is important to you.

The small print

• You have to ride it to work. A bike hired through cycle to work must be used mainly for qualifying journeys, such as commuting. It's for people who want to cycle to work, or want to try it; it is not a way to buy a bike for the tax break. We cover the rules in our guide to running an HMRC-compliant scheme.
• Your employer has to offer the scheme. Cycle to Work is an employer-provided benefit. We've worked hard to remove as many of the reasons they might say no as we can.
• The funded hours are England's. Tax-Free Childcare's £100,000 limit applies across the UK, but the funded hours in the example are an England scheme.
• The rule may change. Labour has said its Childcare Review will reform early years provision and further support working families, and the Conservatives have pledged to end the £100,000 limit.[11][12] It was still in place after the 28 October 2026 Budget, so for now, it applies.

How DASH makes the saving bigger

Most employers on DASH pass their own National Insurance savings back to employees. That lowers the salary you sacrifice for the same bike, to around seven-eighths of its price.

In the 60% band, that takes the saving against the price on the tag to around 67%, or around 73% in Scotland.

DASH is FCA-authorised, so there is no £1,000 cap on what you can hire. You choose from a multi-retailer catalogue, your employer approves the order, and an e-bike or cargo bike that takes you back under £100,000 is within reach. Because the scheme is open all year and you can use it more than once, you can act whenever your income changes. See how DASH works.