Cycle to Work Scheme Calculator
Enter the cost of your bike and accessories, your salary and the hire period to see what the bike to work scheme saves you. You give up salary before tax and National Insurance, so a basic-rate taxpayer outside Scotland saves 28% and a higher-rate taxpayer 42%, less any fee to own the bike at the end.
Updated 2026-10-08 · 2026/27 HMRC rates
| Monthly salary sacrifice | £125.00 |
| Real monthly cost after tax and NI savings | £90.00 |
| Tax and NI saved over 12 months | £420.00 |
| Ownership fee at the end | £375.00 |
| Total real cost | £1,455.00 |
| Cost buying outright | £1,500.00 |
| Salary during the hire (per year) | £30,500 |
| Pension contributions lost a year (if % of reduced pay) | £75.00 |
| Employer NI saved a year | £225.00 |
| Minimum wage check (after sacrifice) | OK: £15.64/hr |
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Key facts
- The personal allowance stays at £12,570 in 2026/27 and is reduced by £1 for every £2 of adjusted net income over £100,000, so it is gone entirely at £125,140 (HMRC income tax rates and allowances).
- In England, Wales and Northern Ireland, 2026/27 income tax is 20% on the first £37,700 of taxable income, 40% up to £125,140 and 45% above that (HMRC rates and thresholds for employers 2026 to 2027).
- Scotland has six bands in 2026/27: 19% starter on the first £3,967 of taxable income, 20% basic to £16,956, 21% intermediate to £31,092, 42% higher to £62,430, 45% advanced to £125,140 and 48% top above that (HMRC rates and thresholds for employers 2026 to 2027).
- Budget 2025 extended the freeze on income tax thresholds and the equivalent employee and self-employed National Insurance thresholds for a further three years, from April 2028 to April 2031 (HM Treasury Budget 2025).
- Employees pay Class 1 National Insurance at 8% on earnings between £12,570 and £50,270 a year and 2% above that in 2026/27 (HMRC rates and thresholds for employers 2026 to 2027).
- Employers pay 15% National Insurance on earnings above the £5,000 secondary threshold, and eligible employers can claim an Employment Allowance of £10,500 (HMRC rates and thresholds for employers 2026 to 2027).
- Self-employed people pay Class 4 National Insurance at 6% on profits between £12,570 and £50,270 and 2% above that; voluntary Class 2 costs £3.65 a week if profits are below £7,105 (GOV.UK self-employed National Insurance rates).
- Dividend tax rose by 2 percentage points from April 2026: the basic rate is now 10.75% and the higher rate 35.75%, while the additional rate stays at 39.35% and the dividend allowance stays at £500 (GOV.UK tax on dividends).
Related
How the cycle to work scheme saves you money
Under the cycle to work scheme your employer hires you a bike and safety equipment in exchange for a salary sacrifice. Because the sacrificed pay is never paid to you, you don't pay income tax or National Insurance on it. Your saving is your marginal rate of tax plus NI. This table shows what a £1,000 bike over 12 months saves at different salaries, before any ownership fee.
| Taxpayer | Example salary | Saving on £1,000 | Real cost |
|---|---|---|---|
| Basic rate (England, Wales, NI) | £30,000 | £280 (28%) | £720 |
| Higher rate | £60,000 | £420 (42%) | £580 |
| £100,000–£125,140 (allowance taper) | £110,000 | £620 (62%) | £380 |
| Additional rate | £150,000 | £470 (47%) | £530 |
| Scottish intermediate rate | £40,000 | £290 (29%) | £710 |
| Scottish higher rate | £60,000 | £440 (44%) | £560 |
| Scottish advanced rate | £90,000 | £470 (47%) | £530 |
Monthly sacrifice over 12, 18 and 24 months
The cost is spread evenly over the hire period. For a £1,500 bike on a £32,000 salary:
| Hire period | Monthly sacrifice | Real monthly cost | Ownership fee (HMRC table) | Total real cost |
|---|---|---|---|---|
| 12 months | £125.00 | £90.00 | £375 | £1,455 |
| 18 months | £83.33 | £60.00 | £315 | £1,395 |
| 24 months | £62.50 | £45.00 | £255 | £1,335 |
Owning the bike at the end of the hire
During the hire the bike belongs to your employer or the scheme provider. At the end you can hand it back, extend the hire, or buy it under a separate agreement. If you buy it for less than its market value, the difference is a taxable benefit, so providers usually charge at least the value in HMRC's table.
Many providers now offer an extended hire instead, keeping the bike on loan for several more years in return for a small deposit, after which the market value is much lower. The calculator lets you enter your provider's own fee.
| Age of bike | Price under £500 | Price £500 or more |
|---|---|---|
| 12 months | 18% | 25% |
| 18 months | 16% | 21% |
| 2 years | 13% | 17% |
| 3 years | 8% | 12% |
| 4 years | 3% | 7% |
| 5 years | Negligible | 2% |
Minimum wage, pensions and other knock-on effects
- Your pay after the sacrifice must not fall below the minimum wage. On the National Living Wage of £12.71 at 37.5 hours, a £1,000 bike over 12 months would leave £12.20 an hour, so employers offer a longer hire or a cheaper package instead.
- If your pension contributions are a percentage of salary after sacrifice, they fall slightly during the hire. Ask whether your employer uses your pre-sacrifice pay.
- Lower pay can affect earnings-related benefits such as Statutory Maternity Pay, Maternity Allowance and Statutory Sick Pay, and a mortgage lender may look at your reduced salary.
- If you leave your job during the hire, your employer can ask you to pay what is still outstanding.
- Your employer also saves 15% employer NI on every pound you sacrifice.
What you can get, and the £1,000 limit
The scheme covers bicycles, tricycles, adapted cycles and electrically assisted pedal cycles, plus safety equipment such as helmets, lights, locks, panniers and child seats. At least half the bike's use should be for journeys to work or between workplaces, and the scheme must be open to all employees. It is not available to the self-employed.
There is no tax limit on the value of the bike. The £1,000 figure comes from consumer credit rules: an employer that runs the hire itself without FCA authorisation is limited to £1,000, while authorised providers can offer more expensive e-bikes and cargo bikes.
Frequently asked questions
Is there a limit on cycle to work schemes?
There is no tax limit. The £1,000 cap only applies where an employer runs the hire itself without FCA authorisation; most providers are authorised and offer higher limits.
Is the cycle to work scheme worth it?
Usually. A basic-rate taxpayer outside Scotland saves 28% and a higher-rate taxpayer 42%. After a typical ownership fee, the saving is still around a fifth to a third of the price.
How does a 24-month cycle to work scheme work?
The sacrifice is spread over 24 monthly payments, so each one is half the 12-month figure. Your tax and NI saving is the same in total, and the end-of-hire value is lower.
Can I use cycle to work for an e-bike?
Yes, if it is an electrically assisted pedal cycle. Bikes over £1,000 need a provider authorised by the FCA.
Does cycle to work affect my pension?
It can if your contributions are based on salary after sacrifice. The effect is small: a percentage of the amount sacrificed.
Is the ride to work scheme different?
Ride to Work is one of several provider brands for the same government cycle to work scheme. The tax rules are identical.
Sources
Figures are taken from official government publications and were last reviewed on 2026-10-08.
- HMRC: Rates and thresholds for employers 2026 to 2027
- GOV.UK: Tax on dividends
- HM Treasury: Budget 2025
- HMRC: Income Tax rates and allowances for current and past years
- GOV.UK: Tax on savings interest – how much is tax free
- GOV.UK: Self-employed National Insurance rates
- HMRC: Capital Gains Tax rates and annual tax-free allowances
- GOV.UK: Business Asset Disposal Relief
- HMRC: Pension schemes rates and allowances
- HMRC: Work out your tapered annual allowance
- GOV.UK: Workplace pensions – what you, your employer and the government pay
- The Pensions Regulator: Work out who to put into a pension
- HMRC: Corporation Tax rates and allowances
- HMRC: Tax credits, Child Benefit and Guardian’s Allowance rates
- GOV.UK: High Income Child Benefit Charge
- GOV.UK: Marriage Allowance
- GOV.UK: Tax-free allowances on property and trading income
- GOV.UK: Tax-Free Childcare
- GOV.UK: VAT rates
- GOV.UK: VAT registration – when to register
- DfT: Cycle to Work scheme – guidance for employers
- HMRC: Employment Income Manual EIM21667A – cycle market values at scheme end
- HMRC: Salary sacrifice and the effects on PAYE
- GOV.UK: National Minimum Wage and National Living Wage rates
Reviewed by Kashif Nazir Khan on 2026-10-08 · software engineer and developer with an interest in accounting and taxation