Is there a limit on the cycle to work scheme?
Not for tax. The £1,000 figure is a financial services threshold that decides who needs FCA authorisation, not how much you can spend.
What the guidance says about tax
The DfT guidance says that for tax and National Insurance purposes there is no limit. In its own words: "For tax and National Insurance purposes there is no limit."
Where the £1,000 comes from
A cycle to work hire is likely to be a regulated consumer hire agreement under the Consumer Credit Act 1974. Hiring goods out is a regulated activity, so normally someone needs authorisation by the Financial Conduct Authority. The guidance gives an exemption:
"There is an exemption from needing authorisation where the owner is the employer and the total value of the goods being hired does not exceed £1,000."
It then sets out where the exemption stops. It does not apply if the goods hired are worth more than £1,000, and it does not apply "if the agreement is with a third party (such as a scheme provider), in which case FCA authorisation is needed."
So an employer that owns the bike needs no FCA authorisation as long as the goods hired are worth £1,000 or less. Above that, or where a scheme provider is party to the agreement, someone has to be authorised.
Who needs authorisation
| Who owns the bike | Value of the goods | Who needs authorisation |
|---|---|---|
| The employer | £1,000 or less | Nobody |
| The employer | Over £1,000 | The employer |
| The scheme provider | Any value | The scheme provider |
Can you spend more than £1,000?
Yes. The guidance answers it directly: schemes over £1,000 "are acceptable provided the requisite Financial Conduct Authority (FCA) authorisation is obtained. This is irrespective of the value of the salary sacrifice arrangement."
In practice that means a scheme provider that holds its own authorisation, because most employers will not want to seek it themselves. Which providers publish a purchase limit is on the provider fee comparison.
The limits that do exist
- The minimum wage. A salary sacrifice must not take pay below the National Minimum Wage, which can cap what a lower-paid employee can take on over a twelve month hire. A longer hire spreads the cost.
- Your employer's own maximum. An employer can choose to set one.
- The provider's authorisation. A provider without its own FCA authorisation cannot go above £1,000 where it is party to the hire.
Sources
Checked .
- DfT, Cycle to Work Scheme Guidance for Employers, June 2019: paragraphs 4.7, 5.2, 5.4 and 5.5, question 2, and paragraph B.2.
- Consumer Credit Act 1974.