Cycle to Work Salary Sacrifice Calculator — 2025-26 Tax Year

How the cycle-to-work scheme works

The cycle-to-work scheme is a government-backed initiative that allows employees to obtain a bicycle and cycling equipment through their employer, paid for via salary sacrifice. The employer either purchases the equipment outright or works with a scheme provider who manages the process.

The employee agrees to a reduction in gross salary — typically spread over 12 monthly payments — equal to the cost of the bike and accessories. Because the deduction is made before tax and National Insurance are calculated, the effective cost to the employee is significantly lower than buying the same equipment from a shop.

How much can you save?

Your savings depend on your income tax band and NI rate. Here is a breakdown for a £1,500 bike:

• Basic-rate taxpayer (20% tax + 8% NI): Save approximately £420 — effective cost £1,080
• Higher-rate taxpayer (40% tax + 2% NI): Save approximately £630 — effective cost £870
• Scottish intermediate-rate taxpayer (21% tax + 8% NI): Save approximately £435 — effective cost £1,065

For more expensive bikes and e-bikes, the absolute savings are even greater. A £3,000 e-bike saves a basic-rate taxpayer around £840 and a higher-rate taxpayer around £1,260. Use our employee calculator to see your exact savings.

E-bikes and the cycle-to-work scheme

Electric bikes have transformed the cycle-to-work scheme. With prices typically between £2,000 and £5,000, e-bikes make cycling accessible to employees who might not consider a traditional bicycle — particularly those with longer commutes, hilly terrain, or physical limitations.

E-bikes qualifying for the scheme must have pedal assist that cuts out at 15.5 mph (25 km/h). They are fully eligible for salary sacrifice, and the savings at these price points are substantial. A £4,000 e-bike effectively costs a higher-rate taxpayer just £2,320 after tax and NI savings.

What equipment is included?

The scheme covers the bicycle itself plus cycling safety equipment. Eligible items typically include:

• Bicycles and e-bikes (including cargo bikes)
• Helmets and high-visibility clothing
• Lights, mudguards, and reflectors
• Locks and security equipment
• Panniers, baskets, and cycle-specific bags
• Bells, mirrors, and other safety accessories

Clothing (other than safety equipment), non-cycling-specific accessories, and replacement parts are generally not eligible.

Employer benefits: NI savings and beyond

For employers, the cycle-to-work scheme is one of the easiest salary sacrifice benefits to implement. Scheme providers handle most of the administration, and the employer benefits in several ways:

• NI savings: 15% employer NI saving on every pound sacrificed (2025-26 rate). A scheme with 50 participants averaging £2,000 in sacrifice saves £15,000 per year.
• Employee wellbeing: Regular cycling reduces sickness absence. Studies show cyclists take 1–2 fewer sick days per year on average.
• Sustainability: Supports carbon reduction targets, ESG reporting, and corporate responsibility commitments.
• Recruitment: A visible, popular benefit that demonstrates investment in employee welfare.
• Reduced parking costs: Fewer car commuters means less demand for expensive workplace parking.

Our employer calculator can model cycle-to-work NI savings alongside other salary sacrifice benefits such as pension contributions and EV car schemes.

Setting up a cycle-to-work scheme

Most organisations use a third-party scheme provider, which simplifies the process considerably. The provider manages employee applications, bike sourcing, salary sacrifice agreements, and end-of-scheme ownership transfers. Popular providers include Cyclescheme, Cycle Solutions, Green Commute Initiative, and Halfords Cycle2Work.

From the employer's perspective, the main requirements are: a salary sacrifice clause in employment contracts, a payroll process for the monthly deductions, and a decision on the maximum scheme value you wish to offer.

With the April 2025 employer NI increase, the NI savings from cycle-to-work and other salary sacrifice schemes are more valuable than ever.