What happens when your cycle to work hire ends

The bike still belongs to your employer or the scheme provider when the hire finishes, so you do not own it yet. What it costs to change that depends almost entirely on how old the bike is by the time ownership changes hands.

Your three options

The DfT guidance sets them out. You can keep hiring it, hand it back, or buy it under a separate agreement made at the time, at a value HMRC accepts, out of taxed pay.

1. Keep hiring it. Extending the hire, or entering a new hire agreement, without transferring ownership means no tax charge arises, as long as the conditions of the exemption are still met.
2. Hand it back. Nothing further is due.
3. Buy it. Under a separate agreement after the hire ends, at a value HMRC will accept, paid from taxed pay.

What HMRC says the bike is worth

If you buy the bike, you pay at least its market value or the shortfall is taxed. HMRC accepts the values in this table, as a share of what the bike cost new, including VAT.

Why most schemes charge about 7%

At four years HMRC's table values a bike that cost £500 or more at 7% of its original price. A scheme that takes a 7% deposit at the end of the first year, extends the hire for three more years and then keeps the deposit as the price is charging exactly that value. A 7% payment at that point is market value, so nothing is taxable.

It is usually described as a fee. It is the tax-correct price at that age rather than a fee.

When a £1 transfer is genuinely tax-free

HMRC's guidance is that if the employee pays less than market value, the difference is taxable as employment income. So £1 only avoids tax once the bike is old enough for HMRC to treat its value as negligible: six years for a bike that cost £500 or more, five for one that cost under £500.

Before that, the difference between £1 and the value of the bike is taxable as employment income. On a £1,800 bike at four years:

The employer also has to report it, and National Insurance can be due on it as well. Small sums, but real paperwork for an employer who was told the scheme costs nothing to run. That is why the length of the loan matters. Green Commute Initiative, for example, extends its loan until the bike is six years old before charging £1.

The rule that protects the exemption

Ownership cannot be promised at the start. HMRC's guidance says the exemption will be prevented from applying if any agreement builds in from the outset an automatic transfer of ownership. In full:

"The exemption for certain loaned cycles will be prevented from applying if any agreement builds in from the outset an automatic transfer of ownership to the employee at the end of a loan or hire period. However, where this is not the case, there is no contradiction in an earlier exempt loan being followed by a decision by the employee to buy the cycle."

HMRC, Employment Income Manual, EIM21667a.

So ownership can only change hands under a separate decision made at the end. A scheme can offer to sell you the bike when the hire finishes, and you can decide then. What it cannot do is write your ownership into the agreement you sign at the start.

If you leave before the hire ends

Your employer may require you to pay compensation to cover the costs they have not yet recovered through your salary. How that works depends on your agreement, so it is worth reading that part before you sign.

What each provider says it charges at the end

From our dated research into what UK providers publish. "Not published" means exactly that. CyclePerk is not affiliated with, endorsed by or acting for any provider listed, and names are used for identification only.

Sources

Checked 2026-09-10.

• DfT, Cycle to Work Scheme Guidance for Employers, June 2019: question 4, paragraphs B.5, B.26 and B.28, and Annex C.
• HMRC Employment Income Manual, EIM21667a.
• Green Commute Initiative, end of hire period.