Guide
Salary Sacrifice Cycle to Work 2026/27
Published by the UK Money Calculators editorial team. Last updated for the 2026/27 tax year.
The cycle to work scheme lets you get a new bike and cycling equipment through your employer, paying for it via salary sacrifice over a set period — typically 12 months. Because the repayments come out of your gross salary before tax, you pay less income tax and employee National Insurance. For a basic-rate taxpayer a £1,000 bike can end up costing closer to £720 in real terms.
How cycle to work salary sacrifice works
Your employer purchases the bike and equipment on your behalf. You then sacrifice a portion of your salary each month to cover the cost, spread over the scheme period. At the end of the scheme, ownership of the bike typically transfers to you, often for a small market-value payment.
The saving arises because:
- Your taxable salary is reduced by the sacrificed amount.
- You pay less income tax at your marginal rate (20%, 40% or 45%).
- You pay less employee NI — 8% on earnings between £12,570 and £50,270, or 2% above £50,270.
The bike is a benefit in kind in theory, but HMRC grants an exemption for bikes that are used mainly for qualifying journeys — so no BIK tax applies if you use the bike for commuting.
Worked example
£1,000 bike, basic-rate taxpayer on £40,000
Without cycle to work scheme:
- You buy the bike from post-tax income. Cost: £1,000
With cycle to work (salary sacrifice over 12 months):
- Gross salary sacrifice: £1,000
- Income tax saving (20%): £200
- Employee NI saving (8%): £80
- Total saving: £280
- Effective net cost: £720 (versus £1,000 paid privately)
A higher-rate taxpayer on the same £1,000 sacrifice would save £400 income tax plus £80 NI (if in the 8% band), reducing the effective cost to around £520.
Add any small transfer-of-ownership payment at the end and these remain the typical figures — though schemes vary.
Scheme rules and limitations
Qualifying use
HMRC requires the bike to be used mainly for qualifying journeys — commuting to work or travel between workplaces. There is no requirement that you cycle on every journey, but predominantly leisure use would remove the tax exemption and BIK tax could apply.
Bike value cap
Most cycle to work providers operate under a Consumer Credit Act exemption that previously capped scheme values at £1,000 (including accessories). HMRC has since given employers flexibility to go above this if they operate as a creditor under the Consumer Credit Act. In practice, many schemes now offer higher limits — but check your employer's specific scheme, as the cap varies.
Ownership transfer
At the end of the scheme period, the bike does not automatically become yours. The most common arrangement is a market-value purchase — typically a small percentage of the original cost — to transfer ownership. Some schemes use a further hire period instead. Your scheme agreement will set this out.
National Minimum Wage
Salary sacrifice must not reduce your cash pay below the National Minimum Wage. If you earn close to NMW, your employer may be unable to process the full sacrifice. See the salary sacrifice and minimum wage guide for detail.
Common mistakes
- Ignoring the ownership transfer cost. The small end-of-scheme fee is real — budget for it.
- Not checking the scheme limit. Some employer schemes are still capped at £1,000. Buying above the limit defeats the tax advantage on the excess.
- Assuming any use qualifies. If the bike is mainly used for leisure, BIK tax may be due.
- Forgetting the effect on other salary-linked benefits. Like all salary sacrifice, this reduces your contractual salary, which can affect mortgage assessments and salary-linked benefits.
Try the calculator
Use our salary sacrifice calculator to see your income tax and NI saving for any sacrifice amount, including cycle to work.
Open the calculator →
Frequently asked questions
Is there a limit on the bike value in a cycle to work scheme?
It depends on your employer's scheme. Historically a £1,000 Consumer Credit Act exemption applied, but employers can now go above this under FCA regulation. Many providers offer schemes up to £5,000 or more. Check your employer's specific scheme documentation for the current limit.
Do I have to use the bike for commuting?
HMRC requires the bike to be used mainly for qualifying journeys (commuting or travel between workplaces). There is no requirement to cycle every day, but if the bike is primarily used for leisure the tax exemption may not apply and Benefit in Kind tax could be due.
What happens at the end of the scheme period?
Most schemes involve a small ownership transfer payment — typically a percentage of the original cost — after which the bike is yours. Some schemes use an extended hire arrangement instead. Your scheme agreement will detail the exact process.
Can I include cycling accessories in the scheme?
Yes. Safety equipment such as helmets, lights, locks and high-visibility clothing can be included alongside the bike, up to your scheme's value limit. General sportswear or non-cycling items do not qualify.
What if I leave my job before the scheme ends?
Your employer will typically require any outstanding balance to be settled — often as a deduction from your final pay. Check the early exit terms in your scheme agreement before signing up.
Official sources
This guide is for general information only. It does not constitute financial, tax or legal advice. Always check your employer's scheme documentation and current GOV.UK guidance before making decisions.