Cycle to Work FAQs
How does the scheme work?
Your employer buys the bike and kit; you hire it via salary sacrifice over 12-18 months. The deduction comes off gross pay, saving income tax and NI · 28% for basic-rate, 42% for higher-rate taxpayers. At the end, a small extended-use fee starts the path to owning it outright.
Is there still a £1,000 limit?
Not for most schemes. Employers using FCA-authorised providers (Cyclescheme, Cycle2Work etc.) commonly allow £3,000-£5,000, which covers serious e-bikes and cargo bikes. Your employer chooses their own ceiling · check the scheme portal.
What is the ownership fee at the end?
HMRC values a 1-year-old bike at 18-25% of its price · paying that would gut the savings. Providers use an extended use agreement instead: a 3-7% deposit keeps the bike in your hands about 3 more years, after which ownership transfers at negligible value. This calculator includes it · plenty of others quietly do not.
Does it work on minimum wage?
Salary sacrifice cannot drop your pay below National Minimum Wage, which limits or blocks the scheme for lower earners · the calculator flags this. Some employers offer a net-salary loan alternative that avoids the NMW issue at reduced savings.
Do I have to use it only for commuting?
The rules say mainly (50%+) for commuting or work journeys, but there is no tracking or enforcement in practice, and leisure use is expected. E-bikes have made 10-15 mile commutes realistic · pair the saving here with what you stop spending on fuel or the season ticket.
For informational purposes only · Not financial advice · 2026/27 rates: basic 20%+8% NI, higher 40%+2% NI · Ownership via extended use agreement varies by provider · Salary cannot fall below NMW after sacrifice