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What is the Cycle to Work scheme?

A guide to the Cycle to Work scheme, how to use it and what bikes you can get with it

Joe Robinson
1 Aug 2020

Cycling to work could be the new normal for a lot of us going forward. With the phased reopening of businesses and workplaces running alongside the indefinite enforcement of social distancing, commuting by bike may be the most sensible, safest and enjoyable way of getting to work.

And as we hit June and the British summer, there has been no better time to transition to commuting by bike. The weather should be warm and largely dry and the days will be long enough in order for you to be able to ride both ways in daylight.

So if you are willing to give up commuting by trains, tubes and taxi cabs in favour of the humble bicycle, before stumping up on a brand new stead, check whether your employer offers the Cycle to Work scheme, a surefire way of paying less for your new bike.

What is the Cycle to Work Scheme?

Ultimately, it is a Government-backed incentive to get more people riding bikes, predominantly to work.

It helps the consumer, you, afford a new bike by spreading the cost over several months’ payslips while also meaning your new purchase is cheaper as the payment for the bike and any accessories is taken before tax.

Most companies now offer the scheme but if your employer does not, consider getting in their ear about doing so. Why? Well, it can save your boss money as they’ll be able to save on employer national insurance contributions for any employee on the scheme (13.8% of the value of the bike, to be precise).

How do I buy a bike on the Cycle to Work Scheme?

Before anything else, double-check that your employer does offer the scheme. Once that’s established, you can start trawling the 2,000 or so retailers that participate in the scheme for that new bike and any accompanying accessories.

When you have found the bike you want, contact your HR department for a certificate totalling the amount of your purchase - this is what you will hand the retailer as payment.

From then on, you’ll see the deduction from your gross salary on your payslip. Usually, this will be over 12 months but some employees may allow you to repay over a longer period. It’s worth noting over this time frame, the employer is technically the owner of the bike.

When the scheme comes to an end, HMRC will then ask for final ownership of ‘fair market value’ to keep the bike.

You may think that this makes the scheme a false economy but it does not. With the amount of money saved on tax, you will have still spent less than buying the bike outright.

Additionally, it's worth saying there are two ownership options: Own it later or Own it now.

The former is the cheaper option with you only paying a 3% deposit on bikes under £500 and 7% on bikes over £500. After three years, you can technically trade the bike back in for that deposit or just keep the bike.

What bike can I get?

Well, according to cycling minister Michael Ellis, the £1,000 cap on bicycles was always a misnomer. Apparently that cap was only in place for companies not signed up to the Financial Conduct Authority, so smaller independent bike retailers.

Realistically, there is nothing stopping you forking out as much as you want as long as your monthly salary can cover it and you can fork up the initial deposit. So, which C2W retailers are selling the Festka Scalatore then?

In all seriousness, you can bag yourself a serious commuter for under a grand.

If you are looking at using this bike all year round to travel to work, there are a few things we’d recommend looking for when buying.

Firstly, consider disc brakes. They offer better stopping power, especially in poor weather, while also allowing for wider tyre clearances. Following on for that, if you want better comfort and puncture protection, go for an option with 28mm tyres or wider.

Also look for bikes that have provisions for panniers and mudguards. Transferring your luggage from you to the bike can do wonders for your back while a set of guards will keep you backside dry during winter.

Furthermore, with the cap no longer really in place, it opens up the excellent opportunity to invest in an e-bike.

If you want more guidance on what bike you should buy, we have a guide to the best cheap bikes and the best bikes for any budget below:

What do I need besides the bike?

The Cycle to Work scheme also allows you to buy accessories alongside the bike and this is definitely something you should take advantage of. In fact, we reckon it is worth using the scheme to buy two bike locks, a good set of lights, a helmet and some high-quality bibshorts.

We have put together a guide to the best bike locks on the market below. This will be a mandatory buy for anybody whose work does not offer secure bike storage. And even if you do have access to secure bike storage, it’s still best to wrap the bike with a lock just to be sure.

While you may be able to get away with no lights throughout summer, if you want to continue commuting by bike through the winter, you will need a good set of lights to keep you visible to other road users. Below is our guide to the best on the market.

Also, consider using the scheme to purchase a helmet. Although it’s not law, most of us feel it necessary to wear one when riding. Below are the best cheap helmets you can buy:

If you are new to cycling, you may be nervous to commit to wearing bibshorts or even go for a set of underwear underneath. But, trust us when we say, bibshorts should not be worn with anything underneath and you will be much more comfortable and happier for riding in them, too. Either way, here are the best picks for men and women:

And finally, get yourself a track pump. Why? Because, having your tyres appropriately pumped up to the right pressure will make you faster, more efficient and probably reduce the likelihood of any pinch punctures.

Can I use it on sale products?

For the big retailers - Wiggle, Evan Cycles, those lot - that’s not a problem but you may find some smaller, independent retailers will not allow you to.

How much is this all saving me?

Good question and the answer is it depends on how much you earn.

Someone on a lower income, therefore paying a lower rate of tax, will likely save around 32% off of their purchases initially while high-earners, paying more tax, will be saving up to 42%.

Then, when you come to that ownership fee at the end, those who opted for ‘Own it later’ will be making a net saving of between 25 to 39%, again depending on how much tax you pay.

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