Summer is just around the corner, and perhaps you’re dreaming of balmy mornings spent on a brand-new bike, speeding down quiet country roads under big blue skies on one of the best road bikes. Or maybe you are considering adding just another bike, perhaps something better suited to weekends spent on the mountain trails, to your steadily growing collection.
Either way – enter the cycle-to-work scheme as an ideal way to finance your new bike dreams!
You’ve likely heard of the scheme before; having been around since 1999 and helping over a million UK workers, the cycle-to-work scheme is a UK government initiative (opens in new tab) designed to get people moving and reduce carbon emissions associated with travelling. It’s also worth noting from the off that there are a few different schemes out there that, at times, are generally referred to collectively as ‘cycle to work’ schemes. This article talks primarily about the cycle-to-work scheme itself just to be clear.
It allows you to purchase a bike (including cargo bikes or electric bikes) and any accessories you might need to go with it through your employer, spreading the cost over monthly tax-free instalments. For basic-rate taxpayers, you’re able to save up to about 32% of the bike’s cost, and for higher-rate taxpayers even more, making it an extremely cost-effective option for anyone interested in doing a bit more cycling.
We’ve pulled together a comprehensive guide to getting started with the cycle-to-work scheme.
How does the cycle-to-work scheme work?
The cycle-to-work scheme works, very simply, by hiring a bike your employer has purchased and repaying them through monthly instalments over an agreed period. Once this period has elapsed, you’ll be given the option to pay off whatever is outstanding to fully ‘own’ the bike yourself. The cycle-to-work scheme is essentially a salary sacrifice; you are sacrificing a portion of your salary for the benefit of the bike.
The minimum term of the salary sacrifice is generally 12 months, with some schemes and employers offering 36 or 48-month options too. How long you can spread your monthly payments will largely depend on the scheme, your employer and your own working circumstances.
The scheme is particularly cost-effective because the monthly instalments are taken from your gross salary, which means that your tax and national insurance will be calculated on your salary less the cost of the bike (and any accessories you’ve added). You are therefore…
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