The Cycle to Work Scheme: how it works

We all know that we need to make changes to contribute to a more sustainable, environmentally friendly future. In recent years, companies have worked hard to develop environmentally friendly practices. 

One initiative that has gained popularity as a way of building a greener business and reducing employees’ commuting expenses is the Cycle to Work Scheme. This programme encourages employees to choose cycling as their mode of transportation, offering financial incentives and benefits. 

In fact, the scheme has become so popular, that recent estimates suggest 82% of employers who offer salary sacrifice schemes make it available to staff. Those using the scheme save around 133,500 tonnes of carbon dioxide a year – the emissions of a small city. The scheme is proven to be an effective way of reducing your company’s carbon footprint, whilst promoting staff wellbeing and offering financial benefits. 

In this blog post, we will explore how the Cycle to Work Scheme works and its numerous advantages for both individuals and the environment.

The Cycle to Work Scheme: what is it?

The Cycle to Work Scheme is a government initiative that allows employees to purchase a bicycle and cycling accessories through salary sacrifice. Essentially, it means you can get a bike tax-free! The scheme was introduced to promote cycling as a healthy and eco-friendly alternative to driving or taking public transport.

The Cycle to Work Scheme explained

To participate in the Cycle to Work Scheme, an individual must be employed by a company that is registered for the programme. The employer acts as the facilitator, setting up an agreement with a third-party cycle provider. This provider could be a local bike shop, an online retailer, or a specialist cycle scheme company. The employer and the employee then enter into a salary sacrifice agreement.

Under the Cycle to Work Scheme, an employee agrees to give up a portion of their salary to cover the cost of the bicycle and accessories. This salary sacrifice is made over a fixed period, typically 12 to 18 months. The employee effectively reduces their taxable income, resulting in income tax and National Insurance contributions savings.

Once enrolled in the scheme, the employee can visit the chosen cycle provider and select a bicycle and accessories that suit their needs and preferences. The range of options available is usually vast, catering to various cycling disciplines, from road bikes to mountain bikes and everything in between. Accessories such as helmets, locks, and lights can also be included.

Cycle to Work Scheme savings

The Cycle to Work Scheme offers significant financial benefits. By participating, employees can save up to 42% of the total cost of the bike and accessories. These savings come from the reduction in income tax and National Insurance contributions. It's worth noting that the exact savings depend on the individual's tax bracket.

Interested? Learn more

Cycle to Work Scheme end of hire

At the end of the salary sacrifice period, employees have the option to purchase the bike outright. Most employers offer a fair market value purchase option, which allows the employee to take full ownership of the bicycle for a nominal fee. Alternatively, the employer may provide a continued loan or rental scheme for a further period.

Although highly valued by employees and excellent for improving their physical health, on its own, the Cycle to Work scheme will not improve employee wellbeing unless it forms part of a larger workplace wellbeing strategy. 

This is because people are multifaceted, and our overall wellness hinges on a multitude of things. These include:

• Physical wellness, such as our general health, the quality of our sleep, and our level of physical activity.
• Social wellness, which depends on how connected and accepted we feel by our colleagues and friends.
• Mental wellness, which encompasses our stress levels and overall happiness.
• Financial wellness, which involves feeling secure in our financial situations.

Given the intricate nature of these factors, it's imperative for workplaces to develop comprehensive strategies for supporting employee wellness.

You may already have a wellness strategy in place. However, the question remains: does it comprehensively address all aspects? Does it inclusively cater to the diverse needs of all your employees, irrespective of their backgrounds or ages?

To assist you, we have crafted the Workplace Wellness Guide.

Within this guide, you'll find resources to:

• Evaluate and enhance your current wellness strategy.
• Follow a guided approach to either develop a new strategy or refine an existing one.
• Understand the critical role of wellness in achieving business success.

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