2025 Guide to UK's Cyclescheme: Everything You Need to Know

 

TL;DR

The UK Cyclescheme helps employees save up to 42% on bikes and gear through simple salary deductions from their pay before tax. Through this tax-efficient program, both basic-rate taxpayers can save £320, and higher-rate taxpayers can save £420 yearly on bikes, e-bikes, and cycling equipment from local retailers. The scheme is open to most UK workers paid through PAYE, requires no upfront costs, and lets you spread payments over 12 months while supporting sustainable transport.

What is Cyclescheme?

Since its launch in 1999, the UK's Cyclescheme has represented a pioneering tax-efficient cycling initiative that enables employees to make substantial savings on bikes and cycling equipment through salary sacrifice arrangements. In 2025, participants can enjoy remarkable savings between 32% and 42% on their cycling purchases, making sustainable commuting more accessible than ever.

Through an innovative salary sacrifice structure, employees can acquire cycling equipment with payments deducted from their gross salary before tax and National Insurance contributions. Basic rate taxpayers can save up to 33.25% of the bike's sale price, while higher rate taxpayers benefit from savings up to 43.25%.

On a £1,000 bike package, basic rate taxpayers could save approximately £320, while higher rate taxpayers could see savings reaching £420 over two years.

The scheme has demonstrated remarkable success, processing over 1.1 million applications since its inception. This workplace benefit not only promotes sustainable transport but also generates significant economic value, contributing an estimated £72 million in annual benefits through improved productivity and reduced healthcare costs.

A game-changing enhancement introduced in June 2019 removed the traditional £1,000 price cap, opening up access to premium cycling equipment, e-bikes, and adapted cycles. This modification has made the scheme more inclusive and comprehensive, allowing employees to select from a broader range of cycling solutions that best suit their commuting needs.

Key Benefits

The program offers additional financial advantages, including:

• Spread payments over 12 months with no upfront costs

• Tax-efficient payments through PAYE

• Comprehensive coverage for bikes and accessories

• Employer National Insurance contribution savings up to 13.8%

Who Can Join the Cyclescheme?

Understanding eligibility for the UK's Cyclescheme is straightforward in 2025. The scheme operates through a clever PAYE salary sacrifice arrangement, making it accessible to most UK workers while offering substantial tax benefits.

PAYE Employees

Most UK employees can participate in the scheme if they receive their salary through PAYE. The key requirement is maintaining earnings above the National Minimum Wage (currently £11.44 per hour) after the salary sacrifice deduction. This equates to roughly £20,000 annually for full-time workers, ensuring the scheme remains accessible to a broad range of professionals.

Company Directors

Directors of limited companies can join the scheme, even as sole employees, provided they:

• Pay themselves through PAYE

• Maintain a salary above the National Minimum Wage after deductions

• Structure their income appropriately (those taking primarily dividends may need salary adjustments)

Special Considerations

Part-time workers and those on fixed-term contracts can participate, subject to:

• Maintaining above-minimum wage earnings post-sacrifice

• Having sufficient contract duration to cover the hire period

• Meeting standard employment status requirements

Who Cannot Participate

The scheme excludes self-employed individuals and sole traders who pay tax through self-assessment rather than PAYE. This restriction exists because the tax benefits rely specifically on salary sacrifice arrangements through the PAYE system.

For employers, participation is open across all sectors—from small businesses to large corporations—provided they register with an approved scheme provider and implement proper salary sacrifice arrangements. This inclusive approach helps maximize the scheme's reach and environmental impact while promoting workplace wellness initiatives.

What Equipment Can You Get Through the Cyclescheme?

The UK's Cyclescheme offers an impressive range of cycling equipment and accessories in 2025, making sustainable commuting both practical and comfortable. From conventional bicycles to cutting-edge e-bikes, the scheme covers everything you need for a safe and efficient commute.

Core Equipment Coverage

Excluded Items

The scheme's flexibility allows employees to purchase equipment without necessarily buying a bike, perfect for those who already own a cycle but need additional gear. Remember, at least 50% of the bicycle's usage must be for work-related journeys, ensuring the scheme fulfills its core purpose of promoting sustainable commuting while offering substantial tax benefits through salary sacrifice arrangements.

Through participating retailers and bike shops nationwide, employees can access this extensive range of cycling equipment, making their commute safer, more comfortable, and environmentally friendly.

How the Cyclescheme Works

The UK's Cyclescheme operates through a clever salary sacrifice arrangement that maximizes tax efficiency while making cycling equipment accessible to employees. Here's a comprehensive breakdown of the process and how you can start your cycling journey.

Application Process

1. Select your dream bike and accessories from any participating retailer.

2. Submit your application through your employer's scheme portal.

3. Receive your eCertificate via email once approved.

4. Redeem your certificate at your chosen retailer.

5. Start enjoying your new bike while saving through salary deductions.

To find out how much you can save on the Cyclescheme, visit the Official Cycle to Work Calculator.

Financial Structure

Monthly Breakdown Example

For a £1,000 bike package on a 12-month agreement:

• Monthly salary sacrifice: £83.33

• Basic rate tax saving: £16.67

• NIC saving: £10.00

• Total monthly saving: £26.67

End of Hire Options

The scheme runs through your employer's PAYE system, ensuring seamless payment processing and tax efficiency. Your gross salary reduces by the equipment cost spread over typically 12 months, leading to lower income tax and National Insurance contributions. This smart arrangement means you're effectively buying your cycling equipment from pre-tax income, maximizing your savings while promoting sustainable transport.

Remember, your salary after the sacrifice must remain above the National Minimum Wage, and at least 50% of the bicycle's usage should be for work-related journeys, aligning with the scheme's commuter-focused objectives.

Conclusion

The UK's Cyclescheme stands as a game-changing employee benefit that makes cycling more affordable and accessible than ever before. Through this tax-efficient program, employees can save up to 42% on bikes and accessories while contributing to a greener future. Whether you're a basic rate taxpayer looking to save £320 annually or a higher rate taxpayer aiming for £420 in savings, the scheme offers clear financial benefits through simple salary sacrifice arrangements. With no price cap, access to premium e-bikes, and support from nationwide retailers, the Cyclescheme transforms daily commutes into sustainable journeys. By joining the 1.1 million success stories, you're not just saving money—you're part of a workplace wellness revolution that's already generated £72 million in economic benefits. The path to sustainable transport has never been clearer or more rewarding. Let's cycle to Mars together.