Buyer’s guide to bikes-for-work schemes

What are bikes-for-work schemes?

Bikes-for-work schemes are a government-backed initiative that allows employees to access a bicycle and associated equipment like helmets, lights and locks via their employer, usually at a significant discount. Employers provide the bikes and equipment as a tax-free benefit.

The employee chooses a bike and accessories through a provider, usually with the employer setting a value limit. The employer then pays for the bike and loans it to the employee, who repays the cost monthly via a salary sacrifice arrangement over a set period (typically 12-18 months). At the end of this period, the employee can either return the bike, extend the hire or buy the bike for a fair market value.

The scheme was originally launched in the UK in 1999 as a way to promote cycling as a healthier and greener form of commuting, and it has remained a popular employee benefit ever since. According to the Cycle to Work Alliance (CTWA), more than two million commuters working for 40,000 employers have received a bicycle via the scheme since it was launched. The CTWA says that 90% of employers believe offering a bikes-to-work scheme has positively impacted employee wellbeing, which a third believe it has helped with recruitment and retention.

What are the cost implications?

Bikes-for-work schemes are generally cost-neutral in the long-term for employers, given the employee is paying for the bike via salary sacrifice. The schemes deliver national insurance (NI) savings for employers, typically 15% in NICs for every employee signed up. Meanwhile, employees save up to 42% on income tax and NI.

Because employers pay upfront for the bike and reclaim the cost monthly via employee salary deductions, there is a temporary cash outlay. Employers can set a cap on the cost of the bike. Setting up and managing the scheme can incur minor administrative costs, but this is often supported by the provider.

If an employee leaves or is made redundant before the end of the scheme, any outstanding balance is usually deducted from their final pay.

Are there any tax or legal issues?

Given bikes-to-work schemes are operated under a salary sacrifice arrangement, employers must take care to update contracts to cover salary sacrifice implications, such as ensuring that any deductions do not take an employee below the National Minimum Wage.

It is important that the bike is legally owned by the employer and on loan to the employee throughout the scheme. The employer must not gift the bike or sell it below fair market value at the end of the hire period; doing this would see the tax exemption revoked.

Employers must have a formal hire agreement in place with the employee. This means they must either hold a Consumer Credit Licence or use a provider which does hold one (most providers are FCA-accredited).

HM Revenue and Customs (HMRC) rules state that the primary use of the bike should be for commuting to work (for about 50% of the time), although employees can use them for personal journeys and, in reality, there is little way of policing this rule. But employees who work from home all of the time can qualify for the scheme, because journeys taken in work hours, such as a lunch run or errands, can count as work-related travel.

What are the current market trends or developments?

According to Benifex, which has partnerships with providers Cyclescheme, Halfords, Evans and Cyclesaver, bikes-to-work schemes spiked just after the pandemic due to restrictions on and anxiety around public transport. While more people are working from home, Benifex notes that employer and employee interest in these schemes remains steady because they are seen to positively impact environmental, social and governance (ESG) goals and support wellbeing.

E-bikes and accessible bikes have become more popular in recent years, according to Perkbox Vivup, as well as cargo bikes which employees can use to take their children to school on their commute.

In 2024, the scheme was extended to include bike hire schemes, such as Lime, Santander and Forest, which allow users to pick up and drop off bikes and e-bikes. Employees can access a monthly or annual subscription to the service via salary sacrifice.

Who are the main providers?

Specialist providers include Cyclescheme (the most widely used scheme in the UK), Halfords (via its Halfords Cycle2Work scheme), Evans and Cyclesaver (currently the only provider to offer access to bike share via a bikes-to-work scheme). Benefits providers like Perkbox Vivup, Benifex and Reward Gateway work with a range of bikes-to-work schemes and often have specific marketplace partnerships in place.