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My Trek hybrid bike is still one of the great loves of my life. It’s a beautiful, sleek, robust machine that I rode to work (and everywhere else) for years. I still ride it, and I wouldn’t own it at all if it weren’t for ‘Cycle to Work’.
First introduced in 1999, the Cycle to Work scheme is a government incentive to encourage more people to cycle to work. The aim was, and still is, to promote a healthier and more environmentally-friendly way of commuting.
Essentially it is a ‘salary sacrifice’ scheme in which you can hire a bike from your employer (who purchases the bike), and pay in installments from your gross salary. You save money because you don’t pay tax or National Insurance contributions on the payments.
Depending on how much tax you pay, you can save between 32 and 42% of the overall cost of the bike (those on a higher tax bracket will make greater savings). After the hire period you usually have the option to buy the bike for 18% or 25% of the original value. The employer can also extend the hire period, after which the fair market value for ownership will be less.
The initial cap of £1000 was removed in 2019, and nowadays there are numerous providers offering similar versions of the scheme, which also covers bike accessories such as clothing, helmets, locks and lights.
Since its conception, the scheme has undoubtedly been a success. The Institute for Employment studies states (in the Impact of the Cycle to Work Scheme Evidence Report, 2016) that 180,000 per year participate in the scheme, and there is a strong suggestion that previous non-cyclists took up cycling because of it.
In this post, we’ll take a specific look at two providers, Cyclescheme and Cycle2Work, to break down how they differ and whether they’re right for you.
Cycle to Work Scheme Providers
Some of the most popular schemes include Bike2Work, Cycle Solutions, Green Commute Initiative and Cyclescheme. In addition, there are schemes offered by specific retailers such as Halfords, Evans Cycles, Cycle Surgery, Chain Reaction Cycles, Balfe’s Bikes and Tredz.
Many retailers use a number of different schemes, but Halfords use their own brand (which we’ll be looking at), called Cycle2Work. Confusingly, this is sometimes referred to as ‘Bike2Work’ – not to be mistaken for the Bike2Work scheme mentioned above.
And on the subject of confusion, with all the providers and retailers offering versions of the scheme, you can end up in a muddle of information as you research, with each provider claiming (in their own words) to be the most popular, the leading, the best, and so on.
With this in mind, if you’re not limited to a provider that your employer has chosen, it’s important to read the large and the small print carefully to see exactly what is on offer, and what will happen at the end of the payment period.
Is Cyclescheme the Same as Cycle2Work?
Cyclescheme and Cycle2Work scheme are two different cycle to work schemes provided in the UK. Cyclescheme is the UK’s biggest scheme and is available with most bicycle retailers. Cycle2Work (not to be confused with the government’s cycle to work scheme) is a private scheme offered by Halfords.
What’s the Difference Between Cyclescheme and Cycle2Work?
Cyclescheme vouchers (known as eCertificates) can be used in bike retailers throughout the UK. Halfords Cycle2Work vouchers (known as Letters of Collection) are for use in Halfords or Tredz. Though these vouchers may be exchanged for use in some independent shops.
For bike options and retailers, Cyclescheme has the greatest range. The Cycle2Work scheme could be seen as more limited, even with the growing number of retailers that will exchange the Letters of Collection.
However, due to the impact of Covid 19 and bike availability, Cyclescheme have currently put their ‘any bike guarantee’ on hold. This, hopefully, is temporary.
Overall, in terms of how they work and the savings made, the schemes are very similar. Applicants for each scheme give their employer code, complete an application form and receive an e-Certificate (Cyclescheme) or a Letter of Collection (Cycle2Work), which can then be redeemed at a participating retailer.
Both schemes offer similar options in terms of purchasing the bike. At the end of the 12 month hire period, you can purchase the bike for 18% or 25% of the Certificate value in accordance with HMRC requirements. For a greater saving, both schemes offer the chance to extend the hire period.
Here, they differ. With the Cycle2Work scheme, the hire period is extended for four or five years, at no extra cost, after which you own the bike. With Cyclescheme, you pay a refundable deposit of 3% – 7%, which becomes the ‘ownership fee’ at the end of the agreement.
| Cyclescheme | Cycle2Work | |
|---|---|---|
| Where Can They Be Used? | Most bicycle retailers except Halfords and Treds | Halfords and Tredz only |
| Hire Period | 12 months | Up to 5 Years |
| Purchase Option | 18% or 25% of value | 18 or 25% of value |
Does Halfords Accept Cyclescheme?
No, is the short answer. Halfords only accept their own Cycle2Work Letters of Collection for bikes and accessories.
Cyclescheme Pros + Cons
| PROS | CONS |
|---|---|
| Has the widest network of any Cycle to Work scheme. Even with the current Covid 19 limitations, with over 2000 retailers accepting Cyclescheme, you are virtually guaranteed to get the bike you want | You have to receive a salary via PAYE. Self-employed/unemployed are not eligible for the scheme |
| You can change retailer from the one you originally requested | The ‘own it later’ option includes a payment (3% – 7% of the Certificate value), which becomes the ‘ownership fee’ |
| You can use Cyclescheme in addition to promotions and sales at a number of ‘no quibble’ retailers, and also with Cyclescheme’s own offers | Employees can only have one hire agreement at one time |
| Added security is offered via the Sign and Collect (SaC) process | |
| Minimum wage/living wage/low hours or temporary earners can apply through IntoCyclescheme for a discount voucher of 20% off bike/accessories with partner retailer, Cycles UK | |
| There is no credit check for applicants Offers City Bike Hire – redemption code can be redeemed for yearly membership with city hire bikes |
Cycle2Work Pros + Cons
| PROS | CONS |
|---|---|
| The hire period is extended (for 4 to 5 years) at no additional cost, with no ownership fee | Less choice is offered in terms of retailers – though there are still a wide range of brands available |
| Letters of collection can be transferred to many independent retailers | Some independent retailers will charge an administrative fee to accept Cycle2Work Letters of Collection |
| Unlimited lifetime safety checks are offered for bikes obtained through the scheme | Employees can only have one hire agreement at one time |
| A lifetime guarantee is given on Halfords brand cycles | Self-employed/unemployed people are not eligible for the scheme |
| Participants are given 10% off cycling ‘essentials’ at Halfords for 12 months | Little information is given on how minimum wage employees can access the scheme |
| 14 day free bike insurance is offered for participants | |
| Employees can have more than one hire agreement at one time (if the employer chooses this option) |
Cyclescheme vs Cycle2Work
Critics of Cycle to Work schemes may argue that if you’re buying the bike after one year, the saving isn’t that great (and to be fair, it isn’t). But those on lower salaries may not have the cash to buy the bike they want up front.
Both of the schemes we’ve looked at offer a way to obtain a good bike, perhaps even a dream bike, without living on bread and beans for a year. And of course there is the option to hire the bike for longer, and save more.
If you’re on minimum wage, Cyclescheme does clarify how the scheme could work for you. But the fact that Cycle2Work doesn’t offer as much information doesn’t necessarily mean that they have no provision for minimum wage participants.
So, in terms of choice, there doesn’t seem to be a lot in it. I used the Halfords scheme (and this was many years ago), and had no issues getting the bike I wanted at a different store. I paid an ownership fee after a year, so my savings weren’t huge. But then again, I did get my beloved bike (worth close to £1000), which I couldn’t have paid for otherwise. It was definitely worth it.
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