What is a Cycle To Work Scheme? The Ultimate Guide to Getting a Bike Through Your Workplace
If you've been considering cycling to work, a Cycle to Work Scheme might be the best way to get you started. A Cycle Scheme allows employees to purchase bicycles and cycling accessories through their employer with significant tax savings, making cycling more affordable than ever. Here’s everything you need to know about how it works, its benefits, and how to get started.
What is a Cycle To Work Scheme?
Cycle to Work Scheme is a government-backed initiative in the UK designed to promote cycling as a healthy, eco-friendly way of transportation. It lets employees buy bikes and cycling gear through a salary sacrifice arrangement, saving on Income Tax and National Insurance in the process. The scheme can cover everything from traditional bikes to electric bikes, cargo bikes, and essential cycling accessories.
How Does the Cycle To Work Scheme Work?
The process is straightforward:
Join through your employer: Check if your employer is registered with one of the Cycle to Work Scheme providers such as CycleScheme, Cycle2work, Green Commute Initiative, Bike2work or any other similar provider. Many employers offer a Cycle to Work Scheme as a workplace benefit.
Choose Your Bike and Accessories: Visit a Cycle Scheme partner shop (like ours!) to pick out your preferred bike, whether it’s an electric cargo bike for those big hauls, a sleek commuter bike, or a sturdy e-bike. Bicyclenation offers a wide range of bikes cargo electric bikes and e-bikes that you can test-ride before you buy! A few of our brands are Tern, Synch, Genesis, Ridgeback, and Brompton. We are working with most of the Cycle Scheme providers.
Salary Sacrifice: Once approved, the cost of the bike and accessories is deducted from your pre-tax salary over an agreed period, typically 12–18 months. This reduction lowers your overall taxable income, resulting in tax and National Insurance savings.
End-of-Scheme Options: At the end of the hire period, you can choose from several options:
Extend your hire agreement at zero cost: This enables you to enter an extended rental agreement without any additional charges. Your rental agreement continues without extra payments, and after a typical term of 4–5 years, ownership is automatically transferred to you.
Pay HMRC fair market value: Employers may be required to cover up to 25% of the bike’s value if it exceeds £500 after 12 months. These help to align with the fair market value requirements set by HMRC.
Decide the fate of the bike: You may choose to keep or return the bike at the end of the salary sacrifice period. If you return it, you may have the option to purchase it at a nominal fee, or the employer may retain ownership.
How to Apply for and Redeem a Cycle To Work Voucher
To get started with a Cycle To Work scheme, follow these steps to apply for and redeem your voucher:
Apply through Your Employer: Log into your employer’s cycle-to-work scheme platform or contact your HR department and apply for a voucher. You’ll need to specify the amount, which should cover your chosen bike and any accessories. Once your application is submitted, your employer will review and approve it.
Receive Your Voucher: After approval, you’ll receive a voucher from the scheme provider, either as a digital code or a physical certificate, matching the value of your chosen bike and accessories.
Redeem the Voucher: Take your voucher to an authorized scheme partner shop (such as ours!) and present it at checkout. The voucher will cover the agreed amount, so you don’t need to pay out of pocket for the items included in your application.
Begin Your Salary Sacrifice Payments: After redeeming the voucher, the agreed cost is deducted from your salary over the specified period, saving you money on taxes and making the bike more affordable.
How Much Can You Save with Cycle To Work Scheme?
The amount saved depends on your tax rate:
Basic-rate taxpayers save about 32% on the cost of the bike and equipment.
Higher-rate taxpayers can save up to 42%.
Benefits of Using Cycle To Work Scheme
Save Money: With savings on tax and National Insurance, Cycle to Work Scheme makes it easier to afford quality bikes.
Flexible Choices: You can choose the bike and accessories that suit your commuting needs, whether you need an e-bike to make longer commutes easier or a cargo bike to carry kids or groceries.
Encourages Healthy Habits: Cycling is a great form of exercise that can improve mental and physical well-being.
Reduce Your Carbon Footprint: Opting for a bike over a car reduces CO₂ emissions and helps to protect the environment.
Cycle To Work Scheme and E-bikes
For those looking to switch to electric bikes, the Cycle to Work Scheme is an excellent way to make it affordable. E-bikes, such as our popular Synch models and Tern cargo electric bikes, offer a boost that makes longer commutes or hillier routes more manageable, especially for people carrying heavy loads or passengers. Tern e-bikes are also renowned for their cargo capacity and durability, making them ideal for urban commuting, family trips, or even small business deliveries.
Cycle to Work Scheme FAQs
Can I use the Cycle to Work Scheme for an electric bike?
Absolutely! Electric bikes are covered under the scheme, and they’re a great choice for longer commutes.Can I still participate if I already have a bike?
Yes, as long as you’re using the new bike for commuting. Many cyclists use the Cycle to Work Scheme to upgrade or get an additional bike for specific needs.What if I leave my job during the Cycle to Work Scheme agreement?
If you leave your job, you'll likely be required to settle the remaining balance.
Conclusion
Cycle To Work Scheme is a win-win for employees, employers, and the environment. With substantial savings, easy setup, and a range of options, it’s a smart way to make cycling an affordable part of your commute. So why wait? Check if your workplace offers a Cycle to Work Scheme, and come by our shop to see our selection of bikes designed to meet every need—from cargo solutions to commuter rides.