More and more employers are considering a Cycle to Work scheme, but many are unsure how it actually works in practice, what it involves, and whether it’s worth the effort. The good news is that, when set up properly, it can be a straightforward, low-maintenance benefit that creates real value for both businesses and employees.
This guide brings together the questions we hear most often from employers. It explains how Cycle to Work schemes operate, what they mean for your business, and how modern providers like DASH have made them easier to run, more engaging for employees, and more beneficial for companies and the environment alike.
How to set up a Cycle to Work scheme for employers?
The process for setting up a Cycle to Work scheme will be different depending on which provider you choose. But generally speaking, it should be a quick and straightforward procedure.
At DASH, setting up typically takes as little as 15 minutes, though this will vary slightly based on company size. To get started, we would simply ask that you provide us with some basic company information, set a payroll date, add your people, and that’s it; you’re ready to launch. When you start this process, we’ll match you with an account manager who will be your human point of contact and on hand throughout the onboarding process and beyond.
As an employer, what are the benefits of offering a Cycle to Work scheme?
Offering a cycle to work scheme at your company delivers three high-impact benefits:
- For the Employee: It helps your people to save between 28-47% on the cost of a new bike or related clothing and accessories. This encourages cycling and is proven to support mental and physical wellbeing. Unlike most schemes, DASH also lets employees use these savings on bike-sharing providers like Lime and Forest and on e-bike subscriptions.
- For the Business: The scheme generates a cash surplus through reduced National Insurance (NI) contributions (15%) and also helps to attract top talent. Good scheme engagement is proven to result in fewer sick days as the workforce becomes healthier.
- For the Planet: It turns the daily commute into a sustainability asset, directly slashing Scope 3 carbon emissions and helping the company meet its ESG targets.
How much does it cost to run a Cycle to Work scheme?
When talking about the costs to run a Cycle to Work scheme, it’s important to separate short-term costs and net costs. The way most schemes work is that the company will fund the purchase of the bike (short-term cost) and then recover that cost over a 12-18 month period through salary deductions (no net costs). In fact, the company also saves money by paying less in Employer NIC; a well-used scheme can result in significant financial savings for a business.
Some schemes, like DASH, also offer to fund the scheme on the company’s behalf. This means that the company would only be charged for the bike after funds have been recovered from their employee’s salary, meaning that the company's working capital is unaffected.
How much time and admin does it take to run a Cycle to Work scheme?
The time and admin required to run a Cycle to Work scheme depends entirely on which type of scheme you use:
- Voucher schemes: Most Cycle to Work schemes use this system. Each time an employee wants to use the scheme, the HR team must process and administer a voucher before manually updating their payroll reporting. Unfortunately, there is also the inevitable added time of answering queries from employees who have got lost at some point during the less-than-intuitive purchasing process.
- Modern schemes: The more modern schemes, like DASH, have removed the vouchers and automated the purchasing and payroll processes. Administering the scheme with DASH can save up to 80% of the admin for HR teams and takes approximately 20 minutes of work per month.
Can a company offer the Cycle to Work scheme with no employer funding?
Yes, you can offer the Cycle to Work scheme without any employer funding or external financing. As it stands, DASH is the only Cycle to Work provider that allows you to offer the scheme in this way. Here’s how it works:
- The company approves an employee order, and DASH will place it with the retailer automatically, funding the upfront costs on the company’s behalf.
- The company will then collect salary sacrifice payments from the employee for 12 months, repaying DASH only after each deduction has been collected.
With this system, your company does not need to pay for the value of an employee’s order upfront and invoices are only due after money has been recovered from the employee, removing the drain on your working capital. What’s more, the scheme can run at a cash surplus for your business because of the 15% employer NIC saving made on the value of each employee order.
Is the cycle to work scheme a benefit in kind?
The Cycle to Work scheme is not a Benefit in Kind, and does not require any P11D reporting from the employer, as long as the proper processes and HMRC guidelines are followed.
Companies working with DASH receive full support and guidance on best practices for maximising scheme success and maintaining scheme compliance.
What happens if an employee leaves the business while hiring a bike through the Cycle to Work scheme?
If an employee leaves the business whilst hiring a bike through the Cycle to Work scheme, any final deductions must be made in their final salary package. Gross pay deductions can be made down to minimum wage, and net pay deductions can be made beyond that to recover the value the employee owes your business.
Disclaimer: This content is for general information only and does not constitute financial, tax, or legal advice. You should seek independent professional advice before making any decisions related to your own circumstances.
Can a Limited Company Director set up a Cycle to Work scheme?
Yes, a Limited Company Director can set up a Cycle to Work scheme. As long as they or their employees are paid via PAYE and are above minimum wage, then they can benefit from the scheme.
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