A new bike, spread over monthly payments, with up to 42% knocked off the price. That is the Cycle to Work scheme, and if your employer offers it, it is one of the cheapest ways to buy a quality bike or e-bike in the UK.
This guide explains how it works, how much you actually save, who qualifies and how to use it at Pauls Cycles. No jargon, just the facts you need to make the most of it.
What is the Cycle to Work scheme?
Cycle to Work is a government-backed benefit that lets you get a new bike and cycling kit through your employer and pay for it out of your gross salary, before tax and National Insurance are taken off. Because you never pay tax or NI on that money, the bike effectively costs you a lot less.
It works as a salary sacrifice arrangement. Your employer (usually through a scheme provider) buys the bike, you hire it from them over an agreed period, normally 12 months, and the cost comes off your pay in monthly instalments. At the end, you keep the bike.
How much can you actually save?
Your saving depends on your tax band, because you are saving the income tax and National Insurance you would otherwise have paid on that slice of salary.
Your tax band | You save roughly |
Basic rate (20% taxpayer) | around 28% |
Higher rate (40% taxpayer) | around 42% |
A worked example on a £1,000 bike:
- A basic-rate taxpayer saves around £280, so the bike costs roughly £720
- A higher-rate taxpayer saves around £420, so the bike costs roughly £580
Here is the part most people miss: the percentage saving is the same whether the bike costs £500 or £3,000. So the more you spend, the bigger your saving in pounds. On a £2,000 e-bike, a higher-rate taxpayer saves around £840. That is why the scheme is such a smart way to afford a better bike or an electric bike.
A small end-of-hire fee usually applies if you want to own the bike outright (more on that below), which slightly reduces the net saving, but the headline numbers above are what the tax break is worth.
How does the Cycle to Work scheme work?
Step by step:
- Check your employer is signed up. The scheme only works if your employer offers it. A quick question to HR or payroll will confirm it, and tell you which provider they use.
- Choose your bike and kit. Pick your bike and any safety accessories at Pauls Cycles, in store or online.
- Apply through the scheme provider. You request the amount through your provider’s portal and, once approved, receive a voucher or certificate to spend with us.
- Your employer sets up the payments. The cost comes out of your gross salary in monthly instalments, typically over 12 months.
- Collect your bike. Redeem your voucher at Pauls Cycles and ride away.
- Decide what happens at the end. Once the hire period finishes, you choose how to take ownership. See below.
Is there a spending limit?
No. The old £1,000 cap was removed in 2019, so there is no longer a fixed upper limit on most schemes. The limit is now set by your employer and their chosen provider, and many cover bikes up to £3,000, £5,000 or more.
This matters most if you want an electric bike, a gravel bike or a higher-spec model, where spreading the cost and saving the tax makes a real difference. Some employers still set their own cap, so check what yours allows before you choose.
Who is eligible?
To use the scheme you need to:
- Be employed and paid through PAYE
- Work for an employer that is signed up to a scheme
- Still earn at least the National Minimum or Living Wage after the salary deduction
That last point matters, because the salary sacrifice cannot take your pay below the minimum wage, which can limit how much lower earners are able to spend. Self-employed people generally cannot use the scheme, as there is no employer to run it.
What can you buy?
The scheme covers the bike plus the safety equipment and accessories you need to ride it, including:
- Bikes of all types: road, mountain, hybrid, gravel, folding and electric
- Electric bikes that meet UK legal requirements (pedal-assist, cutting off at 15.5 mph)
- Helmets, lights, locks, mudguards, pannier racks and bags
- Cycle-specific clothing
It does not cover bike insurance, non-cycling clothing, or accessories on their own without a bike. The application has to include a bike.
What happens at the end of the hire period?
This is the bit most guides skip, so here it is plainly. At the end of the hire period the bike still technically belongs to the scheme, so to keep it you take ownership in one of two ways:
- Own it now. Pay a one-off fair market value fee. Because this is based on the bike’s value after only a year, it can be fairly high, so it is usually not the best option.
- Own it later (the popular choice). Pay a small refundable deposit, typically around 3% to 7% of the original price, then keep using the bike for a few more years. After that it becomes yours for nothing further. This route preserves the most saving, and it is what most providers default to.
Either way, you end up owning the bike for far less than the retail price.
How to use the Cycle to Work scheme at Pauls Cycles
Using the scheme with us is simple:
- Check your employer’s scheme. We accept:
Cyclescheme.co.uk
Bike2workscheme.co.uk
Green commute initiative
Cycle Solutions
GoGeta
c2w support
Cycleplus
Vivup
My Benefits World
- Get your voucher or certificate for the amount you want to spend.
- Choose your bike and kit at Pauls Cycles, in store or online, and redeem your voucher.
Because there is no longer a £1,000 limit, it is worth using your full available budget on a bike that will last and do everything you need, rather than the cheapest option. Our team can help you pick the right bike for your riding and make sure you get the most from your scheme.
Browse bikes at Pauls Cycles or get in touch and we will guide you through it.
Cycle to Work scheme FAQs
How much does the Cycle to Work scheme really save?
Between around 28% and 42% of the bike’s price, depending on your tax band. Basic-rate taxpayers save roughly 28%, higher-rate taxpayers roughly 42%. A small end-of-hire fee applies if you want to own the bike, which slightly reduces the net figure.
Is there still a £1,000 limit?
No. The cap was removed in 2019. The only limit now is whatever your employer and their scheme provider set, and many allow several thousand pounds, which makes the scheme ideal for e-bikes.
Can I get an electric bike on the Cycle to Work scheme?
Yes. E-bikes are fully eligible as long as they meet UK legal requirements (pedal-assist with the motor cutting off at 15.5 mph). The scheme is one of the best ways to afford one, because the saving in pounds is bigger on a higher-value bike.
What happens if I leave my job during the agreement?
You will usually need to pay the remaining balance as a lump sum from your net pay. Check your scheme’s terms before you leave, as the details vary by provider.
Can self-employed people use the scheme?
Generally no, because the scheme runs through an employer’s payroll. If you are self-employed, there are other ways to claim a bike as a business expense, so speak to your accountant.
Do I own the bike at the end?
Not automatically. You take ownership by paying a small fee, and choosing the “own it later” option keeps your saving as high as possible. After that the bike is yours.
