Are Cycle to Work Schemes worth it? Everything you need to know

Are cycle to work schemes worth it? Cycle to work schemes or bike to work schemes as they are sometimes called are now becoming a standard offering for most companies in the UK who are looking to help retain employees and appear more attractive to entice job seekers as one of the companies ‘perks’.

If I told you that you could buy a brand new electric bike with a guaranteed discount of up to 40% would I have your attention? I thought so, read on to find out everything you need to know

Are Cycle to Work Schemes worth it?

In a nutshell, yes! Cycle to work schemes are a great way of buying a brand new electric bike at a substantially reduced price through your employer and depending on what salary tax band you are in determines the level of discount you will receive.

We will explain how this works in more detail further on in this article however for a basic rule of thumb if you are a 40% tax payer you will benefit from a discount of around 40% off the total RRP of the bike, for a 20% tax payer, you would get roughly 20% discount.

The other main benefit is you don't need to pay upfront, the payments are taken monthly over an agreed term via your pay packet from your employer so no expensive finance agreements.

What is a cycle to work scheme?

A cycle to work scheme is backed by the UK government and HMRC enabling employees to purchase bikes and electric bikes through their employers ( who have signed up the schemes) to help promote well-being and a greener way of commuting to work.

These schemes are an agreement between the employer, the employee and a 3rd party supplier who has also signed up to the scheme.

Technically, you are in fact leasing or hiring the bike from your employer during the term of the agreement and the bike is officially not owned by you, however there are options at the end of the agreement to obtain ownership – As you can imagine, the employer does not really want to keep the bike so this usually involves a small settlement payment and the bike is yours.

What are the benefits of a cycle to work scheme?

First of all lets just highlight the benefits of cycling to work in general. Electric bikes have changed the landscape for how we all view cycling to work, now employees can cycle longer distances that previously would not have been an appealing prospect. See how I switched my 16 mile commute from the train to an ebike here.

What are the benefits of a cycle to work scheme ? –

• Save between 20% – 40% on the cost of a new bike
• Fixed monthly cost
• Paid directly from your pay packet through your employer
• Tax Efficient
• You keep the bike at the end of the agreement
• You can have multiple bikes via the scheme
• You can include helmets, locks and bags

What are the rules?

You have to be employed and a UK tax payer
You have to be over 16 years old
Employer needs to be signed up to a scheme ( there are several schemes available provided by 3rd parties)
Bike must be used for commuting at least 50% of the time ( although not really any way of anyone validating this)
Some employers and 3rd parties may stipulate their own restrictions and rules so please check any small print

How do I calculate cycle to work savings?

See below example of what savings can be achieved through a cycle to work scheme dependent on tax bracket

Scenario 1 – John wants to purchase a new Giant Explore E+1 (RRP £3299) bike via his employer, he is a high earner so is in the 40% tax bracket. On the below calculations he gets a discount of 43% taking the new cost of the bike to £1426.82 costing him £156.02 per month over 21 months!

Product	RRP	Tax Bracket	Tax Saving	NI Tax Saving	True Cost of bike	Total Savings	Gross Salary Sacrifice (per month)	Net Salary Sacrifice (per month)
Giant Explore E +1	£3299	40%	£1319.00	£107.22	£1872.18	£1426.82	£274.92	£156.02

How many bikes can I buy on the cycle to work scheme?

There is not a limit to the number of bikes you can have on the scheme, however there are some restrictions your employer may enforce if it exceeds the amount on your payslips for example.

If you are thinking of buying for the whole family, please bear in mind all agreements will be under your name and will come out of your salary each month so worth checking affordability before going down this route.

Can I get a bicycle worth more than £1,000 through the cycle to work scheme?

There used to be a limit of £1000 for any bikes purchased via a cycle to work scheme, however this limit has now been removed which I believe is due to a decent electric bike in most cases exceeding £1000.

This is great news and provides employees with even more savings as the deductions are a percentage off the RRP not a fixed discount.

How do I sign up to a Cycle to Work Scheme?

1. The first thing to do is speak to your employer and ask them which scheme ( if any) they are affiliated with. If they are not yet registered with a cycle to work scheme then its definitely worth asking them if this is something they can do as there are some tax benefits for them by doing so which you can view here.
2. The scheme will have a list of suppliers/ shops or retailers, any of which you can choose a bike from
3. When you have selected the bike and the supplier you usually fill out a form on the Schemes website detailing which bike/model you have chosen, the cost and some details about your employer.
4. The Scheme will then contact your employer for approval
5. Your employer will send you the agreement for signature
6. Upon approval the Scheme will create a voucher and send this to you
7. You then use this voucher as payment with the supplier/ retailer and they deliver the bike.

What happens if I leave my job?

If you leave your job before the end of the agreement most employers will want you to either settle the outstanding ( which can be taken from your final pay packet) or you have the right to refuse this and the employer will retain the bike as ultimately the agreement is held by them and the 3rd party.

Are Cycle to Work Schemes worth it? – Conclusion

So are cycle to work schemes worth it? In my opinion, cycle to work schemes are a no ‘brainer’ as you won’t get a better discount with the added benefit of paying over time with no interest! Most schemes are becoming more flexible allowing employees to now purchase multiple bikes of a higher value.

In addition to the savings, lets not forget the health and environmental impact this has. For me, especially during the summer months this has been a much more enjoyable way of getting to work and leaving the hot overcrowded train behind is worth it alone.

It also of course depends on how far you are willing to commute, I would say anything up to a 20 – 30 mile commute is definitely doable on an electric bike, just make sure you get one that has enough battery range and comfort for the longer commutes. Please see our advice here on best ebikes for a 20 mile commute or a 30 mile commutes.

I would love to hear from anyone else who has used the cycle to work scheme and what their experience was so drop me a comment below.

==>Check out some of our favourite bags for commuting here<==