Is Cycle to Work Scheme Worth It? [PROS + CONS]

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The Short Answer

The Cycle to Work scheme in the UK offers financial benefits to both employees and employers, promoting cycling as a healthier and more sustainable mode of transportation. The worth of the scheme depends on personal circumstances and investment in cycling.

A transformation is underway in towns and cities. A policy shift by those in positions of power influences the ergonomics of a road layout. Social responsibility is sought via programmes of active travel. Governments are seeking ways to get more people to make regular journeys by bicycle or foot. 

Society is encouraged to decide where and when the motor vehicle is still an essential form of transport. Across the world, citizens are recalibrating the rhythms of their lives. They are sifting the urgent from the important. By substituting their motorised commute for self-driven exercise in their daily activities. 

For some, a working week has lost its traditional structure. Working from home may now be integrated into your way of life. Flexible working is more common. Not everyone can cater for this change and there are benefits to some of the structure and order of a working week. 

The unavailability of public transport and freedoms granted by quieter urban roads created new cyclists amongst our populations, regardless of changes to personal circumstances. This unpredicted growth in active travel in the UK was further stimulated by a government backed Fix Your Bike Voucher Scheme, covering the cost of up to the first £50 of repairs and servicing for neglected bicycles seizing up in our sheds. 

So, whether you worked from home or not, the opportunities to cycle for exercise were available and were taken. 

In the UK, there has been a longer-form promotion of active travel through the Cycle to Work Scheme introduced in 1999 as part of the Labour Government’s Green Transport Plan. This sought to get more employees into work by bicycle, offering savings on the acquisition of a new bicycle and accessories associated with commuting. 

What Are The Benefits of Cycle to Work Scheme?

The Cycle to Work Scheme is of financial benefit to both UK employees and employers. Income Tax and National Insurance Contributions (NICs) are reduced in an employee’s pay. An employer saves on their own NICs. Perceived health benefits from increased physical activity could benefit both parties.

After weighing up the pros and cons of any employer Cycle to Work Scheme (we’ll cover some of these below), the employee then browses the range of bicycle shops and retailers who work with the employer’s scheme. 

Employees check the availability of bicycles and essential qualifying accessories such as locks, helmets, lights and waterproof clothing. A qualifying condition is that the bicycle is used more than 50% of the time for commuting. Electric bikes are included. There is no limit on the value of the package applied for, subject to salary and employer’s choice of scheme. 

The items should be quickly acquired. With no upfront costs, payment for the package is spread over a number of months but the employee is up and running quickly. When one scheme hire agreement finishes, the employee can reapply for a new one.  

Is ‘Cyclescheme’ the Same as ‘Cycle to Work’?

No. Cycle to Work is the programme introduced by the UK government to help support cheaper and more sustainable travel. Cyclescheme is the name of one of the competing facilities offered to help with the administrative and retail elements of maintaining one part of the Cycle to Work programme.  

There are several companies and organisation offering Cycle to Work schemes in the UK, including Cyclescheme, Evans Cycles’ Ride to Work scheme or Halfords’ Cycle2work.

Cycle to Work has largely fitted into successive active travel strategies adopted by different UK governments since its creation in 1999. The latest ambition, published in 2017, is that in addition to commuting, cycling and walking become the natural choices for shorter journeys, or as part of the longer journey. 

The financial benefit to UK employees and employers comes via a salary sacrifice method. A deduction is taken from an employee’s gross salary before Income Tax and NICs are taken. The employer does not pay its NICs on the amount deducted. The employer buys the bicycle and hires it to the employee for a fixed term.

The salary sacrifice method is more popular than other suggestions within the Cycle to Work programme of an interest-free loan as a salary advance, like a rail season ticket, or a workplace pool cycle model, which supports short journeys from site to site or local meetings.

It is essential for the employer and employee to understand that the Cycle to Work programme allows for the provision of bicycles and accessories on a hire agreement. The salary sacrifice usually lasts for 12 – 18 months. The employee does not own anything acquired in the hire agreement during this period. 

There are options about taking ownership or returning the bicycle and accessories to the employer at the end of the hire agreement. It is not considered likely that an employer will ask for year-old clothing or worn shoes to be returned.

How Does Cyclescheme Work?

Cyclescheme requires an employer to register. The employer provides essential details and VAT numbers. Key contacts in the business are requested and nominated. Marketing materials are offered to promote Cyclescheme to employees. Employees search for bicycles and accessories from an approved list.

Employees can apply through the employer’s Cyclescheme code. The employer has to check eligibility. Cycle to Work schemes do not permit the salary sacrifice to take an employee below the minimum wage and the employee has to be over 18 or 16 with a guarantor. 

Once approved, Cyclescheme issues an invoice to the employer. After the employer pays Cyclescheme, the employee is issued an eCertificate with a redemption code which enables them to collect their chosen package.

The employer then creates the salary sacrifice process for that employee via their payroll. This ends the employer obligations for the duration of the hire agreement apart from ensuring the accuracy and frequency of the salary sacrifice through payroll.

At the end of the hire agreement, the employee must pay an ownership fee if they wish to keep the bicycle. Ownership of the bicycle can be transferred to the employee immediately or three years after the end of the hire agreement. The employee could re-enrol at any point after the original hire agreement is concluded.

Cyclescheme Pros + Cons

Spreads the cost of starting cycling from scratchYou don’t own the bicycle or accessories at first
Wide range of shops accept eCertificate redemption codeEmployers can limit credit to £1,000 to save on administration 
Employers can promote lifestyle benefits with more credibilityYou pay for maintenance / repair for a bicycle you are essentially hiring 

Does the Cycle to Work Scheme Cost the Employer Anything?

Employers must commit to any Cycle to Work scheme. They have to pay for employees’ bicycles up front. It increases the work of HR departments. It requires PAYE and payroll to work with it. Facilities may need to be upgraded to accept showering, changing and secure areas to store the bicycles.

Some employers will limit the amount an employee can apply for. Any request above £1,000 influences whether the employer requires authorisation from the Financial Conduct Authority. Some circumstances mean the employer should be considered a Credit Broker. Employers may simply choose to avoid the cost and hassle associated with this extra administration.

How Much Can I Spend on the Cycle to Work Scheme?

There is technically no limit on how much you can spend on the Cycle to Work scheme. However, this is down to your own employer. They are under no obligation to offer an excess of more than £1,000, although employers will typically offer more if administration is not an issue.

Is Cyclescheme Worth It?

This depends upon your investment in cycling. If you are starting out, looking for a commuting option without significant upfront cost, comfortable with hire agreements and the end of hire options, it could work. Taking it up implies you are comfortable with taking tax out of the economic cycle. 

You will be making positive contributions to your health and of those around you by participating in an energetic, low-emission activity. You will be reducing the cost, no doubt, of your commute to work.

You’ll save money in the long-run on the acquisition of a bicycle and accessories. If you choose to buy at the end of the agreement, your outlay will be the total cost of the salary sacrifice plus the agreed value of the bicycle at the end of the hire agreement. Plus an ownership fee.

50,000 employers have signed up to Cyclescheme as of August 2021, according to its website. Multinational companies appear as members.. They have economies of scale and sophistication within their payroll departments to manage Cyclescheme. The corporate responsibility of empowering a healthier workforce and lowering emissions will feature in their annual planning and their facilities departments can cope with infrastructure changes. 

However, for SME businesses, attracting the right calibre of employee could still depend on just this type of employee benefit, despite the fixed costs and payroll issues.

Even if you only plan to commute, then you need to factor in that repairs and maintenance are all more or less necessary facts of life. You should decide quickly how much you are willing to part with in order to service and maintain a bicycle if you intend to give it back at the end of the hire agreement. 

You also need to consider the cost of replacement components if you have an accident that requires them to be replaced or upgraded if no longer stocked. You should then consider if and when you will ride in colder, darker, wetter months. In both instances, if you aren’t riding, you’ll still be sacrificing your salary for the duration of the hire agreement and may have to pay for your commute too.

If you move away from your employer before the end of the hire agreement, it is likely that your employer will deduct the outstanding balance of the hire agreement from your final salary. Or ask you to settle the balance where it exceeds the final salary.

How Do I Get Cyclescheme?

To get a bike on the scheme, your employer needs to sign up. To start your application, you need to submit the code of your employer, your payroll number and your bicycle budget (i.e. how much you want to spend).

Once set up, you can begin your process of finding qualifying bicycles and accessories. Some members of Cyclescheme will offer sale or discounted stock as qualifying equipment, so consider the appropriate time of year to apply.

As an employer, setting up will depend on your size, flexibility, business objectives and willingness to invest. Cyclescheme provides helpful guides and FAQs in order to get you started and field any concerns.


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