By subsidising the costs of bicycles and safety accessories, the Government is encouraging us all to cycle to work instead of drive our cars. Under the scheme, organisations buy bikes which employees can ‘loan’ from the organisation. The bike is paid for out of the employees’ gross salary, which means each pound goes further as it’s not been reduced by tax and NI.
If the employer is VAT registered then VAT can also be deducted, totalling cost savings of up to 50%. So basically, you get twice the bang for your buck and you don’t pay it all at once!
Employers save money too, as well as having the advantage of a healthier workforce. Half of all the journeys undertaken in the UK are less than two miles and nearly three-quarters are under five miles. Most people get in their cars for these short journeys (not good for your car either), yet these are easy cycling distances and hardly raise a sweat.
On top of the health benefits and the pleasure of being out on the bike, this scheme offers substantial savings on the cost of a bike and cycling equipment and requires no effort besides filling in the initial form. Your spending goes almost twice as far with this cycle scheme and that’s not even counting any savings on gym membership!
Part of the green transport plan, Cycle to Work is a UK Government scheme in which virtually anyone in paid employment can take part.
You choose a bike and appropriate safety equipment. Your organisation buys these and loan them to you for a regular payment direct from your pay packet, aka ‘salary sacrifice’. The costs are typically divided over 12 or 18 months and are taken out of your gross salary by your employer. This reduces the net cost considerably as the whole slice goes to paying for the equipment, including the amount otherwise taken out for NI and tax. (Some example scenarios below).
Then, at the end of the loan period, your employer may sell you the bike. Usually this is a fraction of the original cost, typically 5% or one extra payment (i.e. a 13th or 19th payment).
"Regular cyclists enjoy a fitness level equal to that of a person ten years younger."
(Source: National Forum for Coronary Heart Disease Foundation, Sharp)
This depends on whether your organisation can reclaim the VAT and on the level of tax you pay (the higher your tax bracket, the more you save). The most you can save is nearly 50% of the cost of the bike and equipment. It’s also comes in handy to be able to spread payments rather than having to fork out the whole amount in one go.
Please note: while you can benefit from the great discounts Tredz offers in
addition to the Cycle to Work savings, we have to reduce the discount by 10% on
discounted items due to the Scheme's admin charges. So, for example, an existing
25% discount becomes 15% on the Scheme (remember, you get the additional Cycle
to Work discount on top of this!).
Here’s an example of how the Cycle to Work scheme helped 'Louise':
Net salary given up £14.26 x 18 months = £256.68 Cost to buy the bike at end of the period = £14.26 Total cost to Louise = £270.94, a saving of £179.06 or 40%.
This table gives some other examples:
Net cost of bike
NI & Income Tax saving over period of loan
Actual cost of bike
Actual monthly cost (over 18 months)
Equivalent SRP discount:
(*For illustration only – figures based on 2006/7 and don’t include a final payment at the end of the loan period. Figures may vary slightly depending on your personal tax situation and assume participation in the scheme for the full term of the loan period)
Any bike you'd like to cycle to work, which can be full price or reduced price. You can also choose from a wide range of cycling safety accessories. Cycling safety equipment is not legally defined, but could include:
If your organisation is running a cycle scheme then anyone at any level who fulfils the following criteria can take part: you have to be over 18, in a salaried job and on PAYE. Your contract of work must cover the duration of the hire period. If the payments take you below the minimum wage level then you cannot take part. This may be the perfect opportunity to ask for a raise…!
No problem, Tredz are also part of Cyclescheme and can provide you with a
quote. You can then take your voucher into our Cardiff or Swansea bike shops.
If you live elsewhere use our website to find the bicycle you like. Then call us on 01792
799508 so we can reserve the bike while you send us your Cyclescheme voucher.
"Cycling at least twenty miles a week reduces the risk of heart disease to less than half that for non-cyclists who take no other exercise."(Source:British Heart Foundation, Morris)
The Cycle to Work scheme will provide you with fitter staff as well as present financial savings for the organisation and your employees. The scheme can also offer a valuable contribution to your company’s transport plan. Regular cyclists tend to be healthier than non-cyclists which contributes to a more motivated workforce with reduced sick leave. Cyclists may even arrive in work ahead of their car-driving colleagues stuck in traffic jams.
In addition, don’t forget the benefits of reduced need for car parking spaces and a 'greener' corporate image for cycle-friendly employers. That’s a whole lot of positives even before going into the financial advantages.
Cycle to Work is a government sponsored scheme for employers to loan bikes and approved cycling equipment to staff as a tax-free benefit. The bicycles should mainly be used to commute to work or for other work-related purposes.
All cycle to work, cycle schemes and salary sacrifice schemes work on the basis that employers buy bikes and safety accessories chosen by the employee(s). These are loaned to the employee(s) for a set period, usually 12 or 18 months, and the employee(s) pay hire charges deducted from their gross salary (aka ‘salary sacrifice’).
Employers can claim back VAT, save on National Insurance payments and claim capital expenditure.
At the end of the agreed period, you may sell the equipment to the employee(s) for a nominal amount, or retain ownership and let the employees use the equipment for free.
All employers can take part in the cycle scheme.
All employees in the company must have the opportunity to take part as long as they fulfil the following criteria:
Any bicycle plus approved cycling safety equipment. Cyclists' safety equipment is not legally defined but could include:
As the equipment is hired to the employee(s), an official Hire Agreement is required under the Consumer Credit Act.To make the scheme easy to use, the Office of Fair Trading has issued a ‘Group Consumer Credit Licence’ for employers which covers purchases up to £1000. Should you wish to provide equipment worth more than £1000 then you need to obtain a Consumer Credit Licence. For information on Consumer Credit Licence applications see
By making use of our existing scheme we will minimise the paperwork for you or for your HR department, making the scheme easy and quick to administer.
You will need to make insurance arrangements with the employee as part of the agreement.
Just give us a call (01792
799508) or email Tredz Cycle to Work and we’ll sort this out for you.
Guidance and further details on the benefits and implementation of Cycle to Work Schemes can be found on the website of the Department of Transport under Sustainable Travel. A comprehensive set of Cycle to Work Scheme FAQs can be found in this downloadable leaflet which will help to answer any additional questions.