Cycle to Work Scheme: Rules, Limits and Savings (2026 UK Guide)

The Cycle to Work scheme is one of the simplest and most popular salary sacrifice benefits in the UK. The short version: it lets employees buy a bike and safety gear through salary sacrifice, saving roughly 20% to 42% depending on tax band. There has been no HMRC cap on the value of the scheme (the limit comes from the provider and consumer-credit rules), though many employers cap it at around £1,000.

PerkIQ does not run cycle to work schemes. This is an independent guide: we take no referral fees or commission from providers, and where we can, we use our provider relationships to get discounts for our users instead. For your own numbers, use our cycle to work calculator.

How does the Cycle to Work scheme work?

Your employer buys a bike and you hire it from them, paying through salary sacrifice out of your gross pay, before income tax and National Insurance are taken. Because the payments reduce your taxable salary, you avoid the tax and National Insurance you would have paid on that money, which is where the saving comes from. At the end of the hire period you can usually buy the bike outright for a small amount.

What is the spending limit?

There is no fixed HMRC cap on its value today. In practice, many employers cap the scheme at around £1,000, because lending above that figure usually needs consumer-credit authorisation from the Financial Conduct Authority. Schemes that carry the right authorisation can offer higher-value bikes, which is why £3,000 and £5,000 e-bike options exist.

How much can you save?

You typically save between 20% and 42% of the cost, depending on your tax band, because the payments come from gross salary. A higher-rate taxpayer saves more than a basic-rate taxpayer. Our calculator will give you a figure for a specific bike and salary.

What can you buy?

You can get a bike, including an electric bike, plus cycling safety equipment such as helmets, lights, locks, mudguards and reflective clothing. The scheme is designed around the bike and the kit that keeps you safe on it, rather than general accessories.

Who is eligible, and what are the rules?

To take part you need to be paid through PAYE, and the salary sacrifice cannot reduce your pay below the National Minimum Wage, which can rule out lower earners. The bike should be used mainly for qualifying journeys, broadly at least half of its use being commuting or other work travel. Your employer also has to offer the scheme in the first place.

Is the bike a taxable benefit?

No. Bicycles and cycling safety equipment provided under the scheme are exempt, so unlike a salary sacrifice car there is no benefit-in-kind to report and no extra tax to pay on the benefit itself. That is part of what makes the scheme so cost-effective.

What happens at the end of the scheme?

The bike stays your employer's property during the hire period. At the end you can usually buy it for its remaining market value, keep hiring it at little or no cost, or hand it back. Buying it at a fair market value is important, because paying too little can create a separate tax charge.

Where PerkIQ fits

Cycle to work is one of several salary sacrifice benefits worth getting right. To see how your lifestyle and salary sacrifice benefits compare with best practice, you can run a free benefits healthcheck in about five minutes, or explore the rest of your options in our provider directory.

Frequently asked questions

What is the cycle to work scheme limit?

There is no HMRC cap on the value of the scheme; the limit comes from the provider and from consumer-credit rules. In practice, many employers cap the scheme at around £1,000 because lending above that amount usually requires consumer-credit authorisation from the Financial Conduct Authority. Some employers run higher-value schemes that carry the right authorisation.

How much do you save with the cycle to work scheme?

You typically save between 20% and 42% of the cost of a bike and accessories, depending on your tax band, because the payments come out of gross salary before income tax and National Insurance. A higher-rate taxpayer saves more than a basic-rate taxpayer. Use a calculator for your own figure.

Can I get an electric bike on the cycle to work scheme?

Yes. E-bikes are eligible, along with the bike itself and cycling safety equipment such as helmets, lights and locks. Because there is no HMRC spending limit, the main constraint is whatever cap your employer sets and whether the scheme has the right credit authorisation for higher values.

Who owns the bike at the end of the cycle to work scheme?

The bike belongs to your employer during the hire period. At the end you can usually buy it from your employer for its remaining market value, continue hiring it at little or no cost, or return it. Buying it at a fair market value keeps the tax treatment correct.

Do I have to cycle to work to use the scheme?

The bike should be used mainly for qualifying journeys, which broadly means at least half of its use should be commuting or other work-related travel. You do not have to log every trip, but the scheme is intended for getting to and from work rather than purely leisure cycling.