Thinking of Buying a Bike? Here's How the Cycle to Work Scheme Can Save You Money

Buying a bike isn't cheap! I recently started looking for a bike to help me on my weight loss journey, and I certainly went into the idea with a very out-of-date mindset on how much a bicycle costs these days! So if, like me, your wallet contents don't match the price tag of the bike you'd like, then one of the Cycle to Work schemes could help.

Not everyone knows about it, I certainly didn't, or how it works, so let’s break it down.

What Is the Cycle to Work Scheme?

It’s a salary sacrifice scheme, so you can get a new bike and accessories now, and then pay them off monthly through your wages before tax.

That means you save on:

• Income tax

• National Insurance
  

Most people save between 32% and 47%, depending on their tax rate.

Two Main Cycle to Work Providers

There are several schemes out there, but most UK employers use one of these:

1. Cycle2Work (by Halfords)

• Backed by Halfords

• Use it at Halfords, Tredz, and selected local bike shops

• Branches throughout the UK, so it's easy to view bikes and collect

• Often capped at £1,000 unless the employer opts into higher limits
  

2. Ride-to-Work (by Evans Cycles)

• Run by Evans Cycles

• Spend at Evans Cycles, or through their online partners

• Offers access to lots of brands and high-end bikes

• Some employers allow up to a £5,000 spend
  

(Other similar schemes include Cyclescheme, Vivup, Bike2Work, Green Commute Initiative and Cycle Solutions) Both schemes I've mentioned operate under the same tax rules. The main difference is which shops you can use and how your employer has set it up.

Ask your HR team which one they use, or check your employee benefits portal. If your employer isn't aware of it, they may be interested in joining, as it not only saves the employee tax but also saves the employer, making them more likely to join than you thought they'd be.

Who Can Use A Cycle To Work Scheme?

You must:

• Be paid through PAYE

• Earn above the National Minimum Wage after the deductions

• Have your employer enrolled in one of the schemes
  

If you're self-employed or a company director without PAYE, you won’t qualify, sadly, and employees earning close to the national minimum wage might not be eligible for the scheme, as government guidelines prohibit it from reducing their salaries below this threshold.

What Cycling Items Can You Get On The Scheme?

It's not just bikes. You can also include:

• Helmets

• Locks

• Lights

• Pumps

• Tyres

• Repair kits

• Child seats

• E-bikes

• A bike lock: If your bike is stolen, the employee is still responsible for completing the full salary sacrifice payments, even if they no longer have the bike, so make sure it's secure!

All accessories must be for commuting. What's importnat to note is that you need to know your exact total when working out how much you want to borrow. If you ask for £1,000 and the cost is £1,001 you aren't able to add the £1 to the voucher (if applicable), and it causes issues. You'd be better off getting the bike on the scheme and then buying any accessories separately if you're worried there's going to be an issue, and that's what was recommended to me by a member of staff at Evans.

The nice thing is that if you time it right, you can also take advantage of any seasonal sales, such as Black Friday or the January sales, as you only pay the price in the store at the time at buying, so if its got £100 off as part of a sale promotions, you save another £100!

How It Works

Each scheme may be a bit different in how it works:

1. Pick your bike and the accessories you need

2. Get a quote through the scheme’s website

3. The employer submits your application

4. The employer then either pays upfront, or you are given a voucher or letter of collection that you take to the shop to make your purchase with.

5. You repay monthly from your salary

6. At the end, you can buy the bike for a small fee, or sometimes no fee.

During the hire period, the scheme provider or employer owns the bike, not you. But you get to use it just like it’s yours. If you leave your job while participating in a Cycle to Work scheme, any remaining balance owed on the bike will be deducted from your final paycheck, without the tax savings. You will then automatically be transferred ownership of the bike. 

Where You Can Shop

Here’s where each scheme works:

Cycle2Work

• Halfords

• Tredz

• Selected independent retailers

• Batribike and other e-bike specialists (via partners)
  

Ride-to-Work

• Evans Cycles

• Online partners like Pure Electric

• Wide selection of brands and performance bikes
  

Each scheme has a store finder tool on its website. Check first before picking a bike shop. You will generally have 14 days from the point of receiving your Certificate/Bike Rental redemption code to cancel, so you can still change your mind once you've signed up to the scheme.

A Quick Example

Let's say your new bike + accessories total £1,200

You're a basic rate taxpayer:

• Save around £384 on tax and NI

• Monthly deduction: £68 for 18 months

• End of hire payment (optional): £100 - Some employers split the total into monthly amounts, meaning there is no final payment, or they arrange it so that you only have a small amount to pay, such as £1.
  

That’s a solid saving, and no upfront cost, plus even though it's a loan of sorts, it won't affect your credit rating, nor will your credit rating affect whether you can take advantage of the scheme!

Is It Worth It?

Ask yourself:

• Will I cycle to work at least once a week?

• Do I want to spread the cost tax-free?

• Would I prefer not to use credit or finance?
  

If yes, it’s worth checking if your employer is signed up. This isn’t a loan. There’s no interest, just a nice, tax-efficient way to save money on a bike.

So, before you buy a bike, find out if your workplace offers Cycle2Work or Ride-to-Work. You can save a significant amount of money and make commuting cheaper, healthier, and more enjoyable.

Ps. I recommend buying a gel seat. I'd forgotten how painful a saddle can be on one's bottom!