At its core, the Cycle to Work scheme is simply a piece of tax legislation (EIM21664). The scheme was first implemented in the 1990s to deliver positive health and environmental outcomes by making commuting to work by bike more affordable and accessible to all. The most common way people use the Cycle to Work scheme is to get a bike. They pay by salary sacrifice and save 28-47% on the cost of their items.
What can you get with the Cycle to Work scheme?
A common misconception is that the scheme can only be used for people to buy bikes, but this is not the case; the ways in which people can benefit from the scheme are far broader (Department for Transport Guidance).
- Employees can purchase bikes, e-bikes and cyclists’ safety equipment. This is something all schemes offer.
- Beyond purchase, people can access all-inclusive e-bike subscriptions through the scheme, although not all providers offer this option.
A new addition is bike share rental. Employees can now pay for bike share services like Lime, Forest, Voi and Santander Cycles through the Cycle to Work scheme, helping them save 28-47% on their journey. This option is only offered by specific scheme providers.
How does the Bike to Work scheme work?
- Companies pick a provider and offer the Cycle to Work scheme to their employees as an employee benefit.
- Employees sign up to the scheme and pick their items. How this works in practice varies from scheme to scheme.
- The items are paid for out of the employee’s salary, saving on income tax and national insurance.
- After the final salary deduction (typically over 12 months), there is a change of contract away from a consumer hire agreement, enabling the employee to take full ownership of their items. The mechanism for this varies between providers.
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