I bought my bike in 2019 via the Cycle to Work scheme. This is my opinion on whether the Cycle to Work scheme was ultimately worth it, and was there anything about the process that I would have done differently?

For complete clarity, I own my own UK limited company, and bought my bike outright. In hindsight that may not have been the best decision, and this post aims to cover why that is.

My biggest piece of advice is factor in the cost of insurance. There are some gotchas with the pricing here that I wasn’t aware of back when I purchased through the Cycle to Work scheme, and depending on the cost of your bike, where you live, and what you’re using your bike for, the price of insurance can be significantly more than the monthly bike payments.

What is the Cycle To Work Scheme?#

The UK Cycle to Work Scheme is an employee benefit program designed to incentivise cycling as a commuting option.

By allowing participants to purchase bikes and cycling equipment through salary sacrifice, the scheme offers potentially substantial cost savings and aims to encourage healthier, more sustainable transportation choices.

Pros:

• Significant Savings: The core appeal of the scheme lies in its potential for substantial cost reduction. By paying for your bike and accessories through pre-tax salary, you significantly reduce your taxable income, leading to savings of up to 47% depending on your tax bracket. This can make owning a quality bike and gear much more affordable for many individuals.
• Improved Health and Well-being: Cycling to work provides numerous health benefits, including increased physical activity, improved cardiovascular health, reduced stress levels, and a heightened sense of well-being. Regular cycling can also boost energy levels and focus, potentially translating to improved productivity at work.
• Environmental Benefits: Promoting cycling contributes to a greener environment by reducing carbon emissions and air pollution associated with car travel. This aligns with broader sustainability goals and can be a factor for environmentally conscious individuals.
• Convenience and Flexibility: Cycling can offer a quicker and more flexible commute compared to public transport in some situations. Avoiding traffic congestion and delays can save time and reduce stress during your daily commute.

Cons:

• Not Universal: The scheme is only available through participating employers, excluding individuals who are self-employed or do not have access to the program through their workplace.
• Upfront Commitment: While you don’t pay upfront for the bike, the program involves a minimum hire period (typically 12 or 24 months) with monthly deductions from your salary. This means committing to regular payments for the duration of the agreement.
• Limited Choice: Some employers may have restrictions on the types of bikes and accessories eligible for the scheme, potentially limiting your selection compared to buying directly from a retailer.
• Storage and Maintenance: Owning a bike requires appropriate storage space at home and work, as well as ongoing maintenance considerations. Ensuring proper care and security for your bike adds another layer of responsibility to the equation.

How does the Cycle To Work Scheme process work?#

How the Cycle to Work scheme works depends on your perspective. There are two perspectives depending on your employment circumstances. These are Employee, and Employer.

Here’s the standard Cycle to Work scheme process:

1. Your employer becomes the buyer: Instead of directly purchasing a bike, your employer acts as the intermediary, using a government-approved provider from the Cyclescheme list. They “buy” the bike and safety equipment you choose (within scheme limits) with pre-tax funds.
2. Salary Sacrifice: You agree to a “salary sacrifice,” where the bike’s cost is spread over monthly deductions from your gross salary. Since this deduction happens before tax and National Insurance contributions, you effectively save on those taxes.
3. The Ownership Twist: While you use the bike during the agreed hire period (typically 12-36 months), your employer legally owns it. At the end, you have the option to purchase the bike at a significantly reduced price (often 10-20% of its original value).

If you are in permanent employment, this is a fairly straightforward process. Search the Cycle to Work scheme website for your employer, and go from there.

If you run your own Limited Company, you assume both roles and this is probably going to involve phoning your accountant. It’s not overly complicated, but of course it does involve the usual increase in admin. Joy.

Is there a Cycle To Work Scheme price limit?#

For a long time, a cycle to work scheme cap of £1,000 held sway. This reflected limitations in regulations and administrative needs. However, times have changed. Now, maximum cycle to work scheme values are largely at the discretion of your employer.

Think of the cycle to work voucher limit as a flexible threshold, not a rigid ceiling. Many employers, embracing the scheme’s benefits, have removed the cycle to work scheme £1,000 limit altogether. This opens doors to a wider range of options, be it an e-bike to power up those hills, a sturdy commuter for year-round rides, or even a specialised bike catering to specific needs.

However, not all employers have embraced the “no limit cycle to work scheme” approach. Some stick to traditional caps of £1,000, £2,000, or £5,000, often factoring in safety equipment and administrative considerations.

The quickest way to determine any price limits set is to use the Cycle To Work scheme website. Enter your employer’s name and check the welcome message.

Once you have selected your employer’s name, if you try to get a quote for more than they are willing to pay, you will see a message such as this:

Beyond the limit: Key takeaways

• Employers now hold the reins on cycle to work price limits.
• Many have scrapped the cycle to work scheme £1,000 limit, expanding your bike and equipment options.
• Some employers retain traditional cycle to work voucher limits.
• Use Cyclescheme’s website to determine your employer’s specific maximum cycle to work scheme.

Are bike repairs covered on the Cycle To Work Scheme?#

In a word: no.

In more words, here’s a breakdown of whether bike repairs are covered under the scheme, based on my personal experiences.

Covered Under the Hood:

• Replacement parts for road-worthiness: The scheme allows for expenses like tires, chains, brake pads – anything essential to keep your bike functioning safely. Technically, these are classified as “safety equipment,” and their cost is tax-deductible through your salary sacrifice.
• Manufacturer’s warranty: Any repairs covered by the bike’s warranty are handled by the manufacturer or retailer, not the scheme itself. Be sure to check your warranty terms for details.

The takeaway here is that you will almost certainly find it simplest to “just pay for the repairs” out of your own pocket. Adjusting the salary sacrifice scheme payments to cover the cost of a £12 chain or £30 tyre is a nightmare.

My accountant wanted £130 to make the adjustment, which was over 10 times the cost of the repair.

Not Part of the Deal:

• Routine maintenance: Regular upkeep like cleaning, lubrication, and minor adjustments are your responsibility. Most shops offer affordable maintenance packages, saving you time and effort if you don’t want to get your own hands dirty.
• Accidental damage: While the scheme doesn’t directly cover repairs due to accidents, it doesn’t penalize you either. You’re responsible for fixing or replacing the bike, but you can continue enjoying tax savings on your outstanding salary deductions.

Insurance: A Wise But Costly Investment:

• Peace of mind: Cycle insurance offers invaluable protection against theft, damage, and even third-party liability. This can significantly reduce your financial burden if your bike needs significant repairs or completely replacing after an accident.
• Claiming repairs: If your bike insurance covers repairs, you’ll handle the claim directly with your insurer. Remember to get quotes from qualified mechanics before proceeding, and keep all receipts for potential future claims.

Remember:

• Ultimate responsibility: While the scheme offers tax benefits and flexibility, you ultimately own the bike (after the hire period) and are responsible for its upkeep and repairs.
• Weighing options: Consider the cost of repairs compared to replacing the bike. If it’s a write-off, you can still enjoy tax savings by choosing a new bike within your remaining hire period.

What are the allowed Cycle To Work Scheme accessories?#

The gist is that any accessories that enable you to get to work in a warm, safe, and secure manner are allowed on the scheme. That’s a pretty big list.

In fact, it’s actually easier to list the things that are not allowed as accessories:

• GPS ride trackers and navigation devices 
• Bike racks for cars
• Cameras 
• Turbo trainers or rollers
• Gift cards
• Nutritional products / foodstuffs
• Power meters
• Headphones
• Children’s bikes

Generally I can agree with every single one of them… except the bike computer (GPS ride tracker / navigational devices), and cameras.

I can see why these would be excluded, but the camera can help with insurance claims, and navigational devices (bike computers) are safety devices, in my opinion. The cynic in me says this is more to do with the cost of those devices, than anything else.

What accessories might I need?#

If you’re an old hand when it comes to cycling, you will likely have every accessory you could need for all road and weather conditions.

However, if you’re new to cycling, or using your bike for commuting, here are some accessories I would suggest. Some I consider mandatory, others are optional. But all add up to be quite expensive, so factor that in to your purchase price.

The essential accessories for a UK bike commute depend on several factors, like distance, weather, and what you carry. Here’s a breakdown categorised for easier choice:

Safety essentials:

• Helmet: Choose a well-fitting, certified helmet with good visibility. Do not skimp on your helmet, I would budget between £120 to £200.
• Lights: Front and rear lights are mandatory at dusk and dawn, but consider using them all day in poor weather. USB rechargeable options are particularly convenient. Budget £50 to £100.
• Reflective elements: Opt for a reflective jacket, bag, or leg bands for extra visibility. Commuter clothing such as the Rapha commuter jacket have built-in reflective elements whilst still looking cool.

Weather protection:

• Mudguards: Keep you (your backside) and your bike dry during rainy commutes. Budget £50.
• Waterproof jacket and trousers: Essential for unpredictable UK weather. Consider breathable options for active rides. Budget £150 – cycling clothing can get expensive, fast.
• Overshoes: Keep your feet dry and warm in wet conditions. Budget £20.

Carrying your belongings:

• Backpack: A good choice for shorter commutes or carrying smaller items. Choose one with comfortable straps and good ventilation. Budget £30.
• Saddle bag: Highly useful for your puncture repair tools, such as pump, spare tube, and throwaway rubber gloves. Budget £40.
• Panniers: Bags mounted on a rear rack, ideal for carrying heavier loads. I do not use panniers so cannot recommend a budget here.

Comfort and convenience:

• Lock: A strong U-lock or D-lock is essential for securing your bike.
• Water bottle and cage: Stay hydrated on your commute.
• Bike bell: Alert pedestrians and other cyclists of your presence.

Additional considerations:

• Cycling gloves: Improve grip and protect your hands against the cold.
• Mirrors: Increase your awareness of traffic behind you, especially useful in heavy city commutes.
• Kickstand: Makes parking your bike easier, especially if carrying luggage.

Remember, adapt your kit to your specific commute and weather conditions. Start with the essentials and build your collection as needed. Happy cycling!

Cycle To Work Scheme Savings Examples#

You will almost certainly save money buying your new bike and all (or most) of your kit and accessories through the Cycle to Work Scheme.

The generally offered figures are lower rate tax payers will save between 25% to 29%, whereas higher rate tax payers will save between 35% to 39%.

Here are a few examples to illustrate the figures for several tiers of bikes. I have also included the figure that the calculators never include, which is bike insurance.

Here’s a link to the Cycle to Work Scheme Calculator.

Common Setup#

For each calculation I have set the following:

• Helmet: £150
• Other accessories: £300

This makes for a total of £450.

We will also cover bike insurance costs. Whilst unaffiliated in any way, we will use Bikmo for the quotes as they are the bike insurance company promoted by the Cycle to Work Scheme.

Bike insurance should cover both theft and damage, along with coverage for your gear. Typically the insurance cover for gear will be a percentage value of your bike. Which is to say if your bike is insured for £1,000, the gear cover may be £100 or 10% of the bike’s value.

For each bike insurance quote example we will use the same postcode. Also we will be including Business Use, as this is for cycling to work.

Let’s now look at some illustrative examples of possible costs and savings.

£349.99 Bike#

I haven’t ridden this myself, but I trust former elite level road racer Francis Cade on all things road cycling, and he says that Decathlon’s Triban RC120 is a really, really good bike for the money.

Anyway, the point is that you can pick up a quality bike for £349.99 (or £399.99 if the sale ever ends).

How might that look on the Cycle To Work Scheme?

Your Salary Sacrifice Details:

• Total Cost: £800
• 12 Monthly Payments: £66.67 (this will be on your payslip)

Savings Breakdown:

• Income Tax and Employee NI Savings: -£256
• Ownership Fee Due After 12 Months: +£56

Final Payment:

• You Will Pay: £600

Percentage Saving Overall:

• Overall Saving Percentage: 25%

Example Insurance Quote:

• Per Month: £4.02
• Per Year: £48.24

Total Spent After 12 Months: £648.24

To put this into perspective, most “entry level” road bikes will have a retail price of around £1,000 in 2024. So you’re getting an insured bike and all the essential kit here for £350 less than the average price of just a bike.

£1,000 Bike#

A thousand pounds may seem a lot of money to spend on a bike. Realistically pre-covid the entry level or “beginner” road bike models were more like £700. But after the pandemic and the whole cost of living crisis, the average entry level road bike is now closer to £1,000.

Your Salary Sacrifice Details:

• Total Cost: £1450
• 12 Monthly Payments: £120.83 (this will be on your payslip)

Savings Breakdown:

• Income Tax and Employee NI Savings: -£464
• Ownership Fee Due After 12 Months: +£101.50

Final Payment:

• You Will Pay: £1087.50

Percentage Saving Overall:

• Overall Saving Percentage: 25%

Example Insurance Quote:

• Per Month: £7.97
• Per Year: £95.64

Total Spent After 12 Months: £1183.14

I feel this is one of the most reasonable and realistic examples of the Cycle to Work Scheme in action, and is roughly what I spent overall.

£2,500 Bike#

Now we’re getting into the more serious hobbyist category. The chances are if you’re looking to spend £2,500 or more on a new road bike, this isn’t your first purchase.

However plenty of serious hobbyists are looking to upgrade their bike in a tax efficient manner, and the Cycle to Work Scheme can be a great way to do just that.

Let’s look at the figures.

Your Salary Sacrifice Details:

• Total Cost: £2950
• 12 Monthly Payments: £245.83 (this will be on your payslip)

Savings Breakdown:

• Income Tax and Employee NI Savings: -£944
• Ownership Fee Due After 12 Months: +£206.50

Final Payment:

• You Will Pay: £2212.50

Percentage Saving Overall:

• Overall Saving Percentage: 25%

Example Insurance Quote:

• Per Month: £14.99
• Per Year: £179.88

Total Spent After 12 Months: £2392.38

At an income of £27,500 (or the national average), this is more than a month’s take home pay (£1,848) for your bike.

I would hazard a guess that if you’re looking to spend £2,500+ on a bike (and gear), then you are earning more than the national average. And that does have an impact on your total cost – in what seems like quite an unfair way – which we will cover below.

£10,000* Bike#

For fun, let’s have a look at what the Cycle to Work Scheme might cost (or save you, depending on your point of view) if you were to go for your dream bike.

The thing is, I couldn’t quite get a quote for a £10,000 bike as the scheme’s maximum limit was £10,000 for my company and I don’t know how to change that. I suspect most companies will have a hard limit, and £10,000 is pretty crazy… I could buy my car several times over for that price.

As it is, I had to cut the bike down from £10,000 to £9,550 in order to come in at £10,000 budget whilst still having some money for gear. Of course if you’re buying a 10 grand bike the gear is probably not going to be the cheaper stuff either, but it’s good enough for this example.

Your Salary Sacrifice Details:

• Total Cost: £10,000
• 12 Monthly Payments: £833.33 (this will be on your payslip)

Savings Breakdown:

• Income Tax and Employee NI Savings: -£3,200
• Ownership Fee Due After 12 Months: +£700

Final Payment:

• You Will Pay: £7,500

Percentage Saving Overall:

• Overall Saving Percentage: 25%

Example Insurance Quote:

• Per Month: £74.56
• Per Year: £894.72

Total Spent After 12 Months: £8394.72

OK, pretty nuts given that you’d be left with £1,000 in your pocket each month after paying for your bike.

Still, a fun example exercise all the same.

Is The Cycle To Work Scheme Unfair?#

Having just covered four different examples of what you would pay for different tiers of road bikes on the Cycle to Work Scheme, it would be remiss not to cover what happens when your earn more.

All the examples above assumed we earned £27,500, which is roughly the UK national average salary in 2024.

However, at various income thresholds, your total savings on the Cycle to Work Scheme actually increase.

This is somewhat perverse, in that the more money you earn, the cheaper the cost of your bike will actually be. It seems very, very unfair that people earning more money should pay less than those earning less.

But that’s the way it is, and I’m not going to offer any further commentary on how that reflects about the UK overall.

Salary / (Savings %)	£350 bike	£1,000 bike	£2,500 bike	£10,000 bike
£27,500	£600	£1,087	£2,212	£7,500
£55,000 (29.74%)	£520	£942	£1,917	£7,026
£75,000 (35%)	£520	£942	£1,917	£6,500
£150,000 (40%)	£480	£870	£1,770	£6,000

The fairness of the Cycle to Work Scheme depends on the perspective from which it is examined. On one hand, the scheme aims to promote eco-friendly commuting and make bicycles more accessible to a wider population. From this standpoint, it can be seen as a positive initiative with the potential to encourage healthier lifestyles and reduce carbon emissions.

However, as your income increases, the savings on the Cycle to Work Scheme also increase, creating a situation where individuals with higher incomes benefit more. This can be perceived as unfair, as it implies that those who are already financially better off receive a larger advantage in terms of proportional savings on bike purchases.

I’d love to hear your thoughts on this, so do leave a comment below.

Evaluating the Cycle to Work Scheme#

The Cycle to Work Scheme in the UK presents a compelling opportunity for individuals to embrace a healthier and more sustainable mode of commuting while enjoying potential cost savings.

The scheme’s core appeal lies in significant reductions in the cost of acquiring a bike and related accessories through pre-tax salary contributions.

Pros and Cons Overview#

Let’s take a closer look at the Cycle to Work Scheme’s upsides and downsides. On the bright side, you’ve got significant savings, health perks, and eco-friendly vibes. But it’s not all sunshine – there’s the catch of limited availability, committing to monthly payments, and some restrictions on your choices.

Pros:#

1. Significant Savings: The potential for up to 47% savings, depending on tax brackets, makes quality bikes and gear more affordable.
2. Health and Well-being Benefits: Commuting via cycling contributes to improved physical health, reduced stress, and increased well-being.
3. Environmental Impact: The scheme aligns with sustainability goals by promoting eco-friendly transportation, reducing carbon emissions, and air pollution.
4. Convenience and Flexibility: Cycling offers a faster and more flexible commute, avoiding traffic congestion and promoting a stress-free journey.

Cons:#

1. Limited Availability: The scheme is only accessible through participating employers, excluding self-employed individuals.
2. Upfront Commitment: Participants commit to a minimum hire period with monthly salary deductions, necessitating a financial commitment.
3. Choice Limitations: Some employers may restrict the types of bikes and accessories eligible for the scheme, limiting options.
4. Ownership and Responsibilities: Legal ownership lies with the employer during the hire period, and individuals are responsible for storage, maintenance, and repairs.

Key Considerations#

Even with the handy Cycle to Work Scheme calculator, not all costs are factored in. Don’t forget insurance, along with the yearly costs of regular wear and tear, repairs, and maintenance.

1. Insurance Costs#

• Consider the often overlooked aspect of insurance costs, as they can significantly impact the overall expenses.
• Factor in the potential complexities of adjusting salary sacrifice payments for minor repairs.

2. Price Limits#

• Employers now determine the scheme’s price limits, with many eliminating the previous £1,000 cap.
• Individual employers may still impose their own limits, affecting the range of available options.

3. Repairs and Maintenance#

• While some repairs are covered, routine maintenance and accidental damage are the responsibility of the individual.
• Cycle insurance is recommended for comprehensive coverage, especially for high-value bikes.

4. Accessories#

• The scheme allows a wide range of accessories for a safe and comfortable commute.
• Exclusions, such as GPS devices and cameras, raise questions about safety and practicality.

5. Savings Examples#

• Savings on the Cycle to Work Scheme vary based on income, with higher earners benefiting more proportionally.
• Examples illustrate potential savings and costs for bikes at different price points, including insurance considerations.

Final Thoughts#

While the Cycle to Work Scheme offers clear advantages in terms of cost savings, health benefits, and environmental impact, it is not without its challenges. The potential disparities in savings based on income levels raise questions about fairness. Additionally, participants should carefully consider factors such as insurance, repairs, and the overall cost of ownership.

In deciding whether the Cycle to Work Scheme is worth it, you must weigh the financial benefits against the scheme’s limitations and your personal circumstances.

Personally I saved money on the scheme. I would have saved significantly more if I had opted for the “own it later” option, and let my business own the bike until the end of the lease period. As my income is effectively minimum wage, and my total bike and accessories cost was just over £1,000, I didn’t save that much, comparatively. Still, any money saved is better than nothing.

Ultimately, the scheme provides an avenue for promoting sustainable commuting, but you should approach it with a clear understanding of both its advantages and potential drawbacks. Have all your figures in mind up front, and don’t go crazy on the bike cost.