Cyclescheme is a Government Green Transport initiative. It allows employees to buy a bike tax free, usually through salary sacrifice.
Everyone wins: employees make big savings on new bikes, employers get a healthier workforce and save money too.
To sign up for the scheme, go to Cyclescheme .
How does it work?
- Your employer signs up for the scheme. You choose your new bike, which must be from an approved supplier. You can usually get approval if your shop of choice is not already approved;
- Your employer buys this bike: in most cases, the VAT can be reclaimed. The bike is for your exclusive use, but at least 50% of your mileage should be commuting or work-related travel. You’re not obliged to cycle to work every day;
- Providing the employer is VAT-registered, the VAT-free price of the bike is repaid via salary sacrifice over an agreed period. This is usually between 12 and 18 months. You do not pay Tax or National Insurance on the income you forego. So you could make further savings;
- After the agreed period you will usually have the option to purchase the bike at a ‘fair market price’. This can be between 2.5% and 10% of its original cost.