The cycle to work scheme for employers

The employer buys the bike, recovers the cost through payroll, and saves 15% employer National Insurance on the amount each employee sacrifices. The official guidance still prints the 2019 rate, so here are the rules with current figures.

What it saves you, at current rates

The employer saves 15% employer National Insurance on the amount each employee sacrifices. On a £1,000 bike that is £150.

The DfT guidance, last revised in June 2019, gives this saving as 13.8%, the rate at the time. Employer National Insurance has risen since.

What you have to do

1. Offer it to everyone. The DfT guidance says the offer must be made available across the whole workforce, with no groups of employees being excluded.
2. Keep pay above the minimum wage. The sacrifice must not take pay below the National Minimum Wage.
3. Own the bike, or use a provider that does. The hire is likely to be a regulated consumer hire agreement. An employer that owns the bike needs no FCA authorisation for goods worth £1,000 or less. What the £1,000 limit actually is.
4. Run the sacrifice through payroll for the hire, typically at least twelve months.
5. Never promise ownership at the start. A built-in transfer at the end removes the tax exemption. What happens at the end.

If a sacrifice would breach the minimum wage

The guidance suggests a lower value package, a longer hire period, or hiring the cycle without a salary sacrifice. A longer hire lowers the monthly deduction. Past eighteen months the employee gains a statutory right to end the hire under the Consumer Credit Act 1974.

VAT

VAT on the bike is input tax in the normal way. Where there is a salary sacrifice, the guidance treats the sacrifice as consideration for the equipment, so output tax is due on the amount of salary forgone. For most VAT-registered employers the two broadly cancel.

Capital allowances

Bikes bought outright to hire to employees are capital expenditure, and for many businesses they qualify for the Annual Investment Allowance. The single-director company page quotes the guidance in full.

If an employee leaves

The guidance allows the employer to require compensation for costs not yet recovered through the sacrifice. Say how that works in the scheme terms before anyone signs.

Sources

Checked 2026-09-10. Employer National Insurance rate from HMRC, rates and thresholds for employers 2026 to 2027.

• DfT, Cycle to Work Scheme Guidance for Employers, June 2019: paragraphs 4.5, 4.6, 5.2 and 5.4, and B.2 to B.6, B.16, B.17 and B.30 to B.32.