Purpose-driven entities—such as charities, social enterprises, B Corps, and sustainability-focused SMEs—use the Cycle to Work Scheme to support their environmental and social missions. The scheme enables employees to acquire bikes and safety equipment via salary sacrifice, saving up to 47% through tax and NI relief.
Tax exemption summary
Employers can lend or hire cycles and safety equipment tax-free if:
- The offer is available to all employees, although different people may be offered different terms.
- The cycle is used mainly for qualifying journeys (e.g. business journeys and commuting to work).
- Occasional personal use is allowed, as long as commuting remains the primary use.
- No detailed records are required unless there’s clear evidence of non-compliance.
- E-bikes and bike-share schemes are included.
- Safety equipment must be practical (e.g. helmets, lights, reflectors), not accessories like cycle computers or non-reflective waterproofs.
- Employers that are VAT registered can reclaim the VAT on the cost of the bike (note, most second
- If offered in addition to salary there is no VAT reclaim; however if the employee pays back (through salary sacrifice or otherwise) the employer must account for VAT on the amounts paid back.
- Historically there was a £1000 cap if the cost of the bike had to be repaid, however there is now no cap on the amount employers can offer.
Benefits
- Environmental: Reduces emissions and supports net-zero goals.
- Wellbeing: Encourages healthier lifestyles and reduces absenteeism.
- Social Value: Enhances CSR and ethical brand reputation.
Innovations & Challenges
Purpose-driven entities often integrate the scheme with other benefits (e.g. EV leasing, volunteering time) and offer inclusive options like adapted cycles. Challenges include affordability for lower-income staff and infrastructure limitations.
Owner managers
If you are a single person company, or if all directors and employees are offered a bicycle, you can also benefit from the tax breaks for employer provided cycles. Usually the owner manager would simply have the tax free bike on top of their salary, whereas employees may be offered a salary sacrifice arrangement to effectively pay the employer back for the bike. Of course, the above bullet points apply to directors as well as employees, including that the bike must be mainly used for business trips and commuting.
