Joining a Cycle to Work scheme is a relatively simple process for employers. You choose a scheme provider who will walk you through the admin, then tell your staff that it's available. Once launched, employees request a bike, you approve it and the cost is recovered through salary sacrifice. The scheme is mostly cost neutral to run, and both the employee and the employer save on National Insurance contributions.
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The five steps to join are:
The Cycle to Work scheme is a UK government initiative that gives a tax exemption on bikes and cycling equipment, to encourage people to commute in a healthier and more environmentally friendly way.[1] Employers loan these products to their employees as a tax-free benefit, with the cost coming out of the employee's gross pay via salary sacrifice.
According to the Department for Transport's implementation guidance, any employer, of any size, across the public, private and voluntary sectors can run a scheme.[2] Two rules matter most:
The bike should also be used mainly for qualifying journeys, such as commuting to work.
The first step is choosing a provider. There are many options available, and the right one depends on the needs of your company. Useful things to compare include:
For example, DASH has an online shopping experience, runs flexible options like salary-sacrificed bike share with Lime and other operators, and uses a simple payroll reporting system to keep HR's role light touch.
Each provider has a different setup process, but most begin with registering, agreeing to their terms and conditions and choosing your scheme settings. Some companies may want to set a spending limit for their employees. Others may prefer a monthly payment option, such as the one DASH offers, which keeps costs neutral for the business.
You can launch your chosen scheme with an internal announcement, alongside the provider's own marketing materials and launch email. It is important to offer the scheme to all staff, as this is a condition of the tax exemption.[3] If you use a benefits platform, your new scheme can appear there too. You can also update employee handbooks to include your Cycle to Work scheme.
Approving employee requests is quick and needs just a few checks before you sign off:
The employer pays the provider for the equipment, then recovers the cost through monthly deductions from the employee's gross pay, often over 12 months. Each month, the scheme provider reports a deduction figure to the employer, which payroll then deducts from the employee's gross pay.
Some schemes only let employees enter an agreement once a year, so there is one fixed figure taken from pay each month. With schemes like DASH, where employees can enter multiple agreements at any time of year, this figure may change. Payroll teams should check the figure each month to make sure they are deducting the correct amount.
While 12 months is the most common recovery period, employers can shorten it by collecting a larger sum from the employee's gross pay each month. Not every scheme will report this figure. For example, DASH reports a 1/12 figure, but the employer is free to work out their own deduction to shorten the salary sacrifice period.
Paying upfront is the most common option across providers, but some offer an alternative that keeps the employer cost neutral during the salary sacrifice period:
| Payment model | How it works | Employer cash flow |
|---|---|---|
| Upfront | Employer pays the provider the full cost when the bike is ordered | Outlay recovered over the hire period |
| Monthly | Employer pays the provider each month, in line with the employee's salary sacrifice | Cost neutral throughout |
DASH, for instance, offers the monthly payment option, where the employer pays DASH back each month alongside the employee's deductions.
The scheme is mostly cost neutral for employers. The equipment cost is recovered from the employee's gross pay through salary sacrifice, and the employer saves employer National Insurance (15% from April 2025) on the amount sacrificed.[4] Whether there is any outlay depends on the provider: upfront payment means a short-term cash flow cost, while a monthly payment option keeps the business cost neutral throughout.
Employees save income tax and National Insurance on the amount they sacrifice. Basic-rate taxpayers typically save around 28%, higher-rate taxpayers around 42% and additional-rate taxpayers around 47%. The exact saving depends on the employee's tax band and where in the UK they pay tax.
The most common salary sacrifice period is 12 months, and the government guidance notes schemes usually run for 12 or 18 months.[2] Employers can choose a shorter recovery period by deducting more each month, or a longer one if a standard deduction would take an employee below the minimum wage.
This depends on the provider. Many schemes offer ownership for a fair market value fee or ask the employee to extend the hire. With DASH, the hire is extended until the bike's HMRC value reaches nil, at which point ownership transfers with nothing further to pay.
Joining a Cycle to Work scheme is a relatively simple process for employers. You choose a scheme provider who will walk you through the admin, then tell your staff that it's available. Once launched, employees request a bike, you approve it and the cost is recovered through salary sacrifice. The scheme is mostly cost neutral to run, and both the employee and the employer save on National Insurance contributions.
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