Cycle to Work Savings Calculator
See the real cost of a bike through the cycle to work scheme, after the income tax and National Insurance you save by paying from gross salary. Updated for the 2026/27 tax year.
Bike and salary details
What the bike costs you
| Over the hire period | |
|---|---|
| Bike and accessories value | £1,200 |
| Income tax saved | £240 |
| National Insurance saved | £96 |
| Net cost to you | £864 |
The bike comes out of your salary before tax, so a £1,200 bike effectively costs you £864. A small ownership fee or extended-use deposit may apply at the end of the hire period, depending on your scheme.
What it means for the employer
The cycle to work scheme is cost-neutral or better for the employer. On top of supporting healthier, greener commuting, you save employer National Insurance on the amount sacrificed.
Cycle to work is exempt from the 2017 Optional Remuneration Arrangement rules, so it keeps its full tax advantage. Most schemes are run by a provider at no net cost to the employer.
How the cycle to work scheme works
The cycle to work scheme lets an employee get a bike and safety equipment through salary sacrifice. The employer (usually through a scheme provider) buys the bike, and the employee hires it by giving up part of their gross salary over a fixed period, typically 12 or 18 months. Because the cost comes out before income tax and National Insurance, both the employee and the employer save.
How much do you save?
A basic rate taxpayer typically saves around 28% (20% income tax plus 8% National Insurance), and a higher rate taxpayer around 42% (40% plus 2%). The employer saves 15% employer National Insurance on the amount sacrificed. There is no longer a £1,000 limit on the value of the bike, so e-bikes and higher-value bikes are available through FCA-authorised providers.
Why the 2017 salary sacrifice changes do not apply
When the government restricted most salary sacrifice schemes through the Optional Remuneration Arrangement rules in 2017, cycle to work was one of the schemes left exempt. That is why it keeps its full tax and National Insurance advantage, and it is not affected by the £2,000 pension salary sacrifice cap coming in April 2029, which applies to pensions only.
What happens at the end of the hire period?
You do not own the bike while you are hiring it. At the end, most providers offer an extended-use agreement, where you pay a small refundable deposit and ownership transfers to you later at no further cost, or the option to buy the bike at its fair market value. The figures above show the salary sacrifice saving; a small end-of-hire fee may apply depending on your scheme.
See where this fits in your benefits package
Cycle to work is one piece of the picture. PerkIQ scores your whole employee benefits offering across 7 categories and shows you exactly where to improve.
Get your free benefits scoreCycle to work scheme: common questions
How much can I save with the cycle to work scheme?
Because the cost is taken from your gross salary before tax and National Insurance, a basic rate taxpayer typically saves around 28% (20% income tax plus 8% National Insurance) and a higher rate taxpayer around 42% (40% plus 2%). The employer also saves 15% employer National Insurance on the amount sacrificed. Enter your figures in the calculator above to see your own saving.
Is there a limit on the value of the bike?
The old £1,000 limit was removed in 2019, so schemes run by an FCA-authorised provider can offer higher-value bikes and e-bikes. Your own scheme may still set a cap, so check with your provider before choosing.
Do I own the bike at the end of the scheme?
Not during the hire period; you are hiring the bike while you sacrifice salary. At the end most providers offer an extended-use agreement, where you pay a small refundable deposit and ownership transfers to you later at no further cost, or the option to buy at fair market value. The calculator shows the salary sacrifice saving; a small end-of-hire fee may apply depending on the scheme.
Does the cycle to work scheme affect my pension or other benefits?
It reduces your gross salary on paper while you are sacrificing, which can affect anything calculated from it, and your pay cannot drop below the National Minimum Wage. As long as your earnings stay above the lower earnings limit, paying less National Insurance does not reduce your State Pension entitlement.
Is cycle to work affected by the 2017 salary sacrifice changes or the 2029 pension cap?
No. Cycle to work is one of the schemes exempt from the 2017 Optional Remuneration Arrangement rules, so it keeps its full tax advantage. The £2,000 cap coming in April 2029 applies to pension salary sacrifice only, not to cycle to work.
