How Cycle to Work Schemes Work and Why They Matter
27 March 2025
You’ll have heard of a Cycle to Work scheme, but you may have questions about how they work. More importantly, you may be asking yourself, are they worth it? During this blog, we’ll cover all you need to know about the Cycle to Work Salary Sacrifice Scheme and how it helps your employees and business. Read on to understand what makes a great scheme.
What is the Cycle to Work Scheme?
First introduced in 1999, over 40,000 employers have adopted the Cycle to Work scheme, providing bikes to over 1.6 million employees across the UK. Although it’s been around for over 20 years, people still ask us how the scheme works and how it benefits businesses and employees.
The government introduced the Cycle to Work scheme to promote healthier, greener travel methods. Fast forward to 2025, and the CSR and employee wellbeing elements are just as vital as ever, but more so, the money-saving opportunities for employers have come to the forefront.
Initially, the Cycle to Work scheme had three main objectives:
- To encourage employees to commute via greener, more environmentally friendly transport.
- To provide employees with a financial incentive to invest in a bicycle for work.
- To promote a more active lifestyle.
These objectives remain today, but a fourth has come to the forefront - reducing employer National Insurance Contributions (NIC) for every employee enrolled in the scheme.
How Does the Cycle to Work Scheme Work?
Essentially, this scheme allows employees to purchase a new bike at a discounted rate, which they can pay for via salary sacrifice. In addition to the discounts, employees reduce their tax and NIC while repaying via salary sacrifice.
The great thing about our scheme is that once an employee finishes paying for their bike, it’s theirs, thanks to a zero-cost extended hire solution. So there are no hidden charges at the end of the repayment period.
With the reduced rate of tax and NIC, employees could save over 40% on the initial cost of their bike. The actual rate is about 32% for basic-rate taxpayers, but this increases to around 42% for higher taxpayers.
Employers Recoup the Costs
With a Cycle to Work salary sacrifice scheme, the business covers the cost of the application, approving the release of a Letter of Credit (LOC), which the employee uses to purchase the bike outright. Employers then recoup the cost during the salary sacrifice repayment period, usually from 12 to 18 months.
The Green Commute Initiative has designed a helpful calculator to help you find out exactly how much you could save.
The Application Process
Signing up for our Cycle to Work Salary Sacrifice Scheme is super straightforward.
- A company signs up for our Cycle to Work scheme.
- Here at Pluxee UK, we have access to over 98% of bike brands in the UK (including the electric bike market). So, the next step is for your employees to choose the perfect bike from a vast range, select their safety gear and helmets, apply, and wait for approval.
- Employees collect their new bikes and repay their employer through monthly instalments - salary sacrifice.
Why cycle to work? Visit the government's website for rules and guidance.
Are Cycle to Work Schemes Worth It?
While not new, given the current climate, Cycle to Work schemes are a hot topic. They create healthy and active employees, reduce carbon emissions and help employers reduce their NIC bills.
That’s just the tip of the iceberg. Cycle to Work Salary Sacrifice Schemes deliver a host of benefits to employers and employees.
Employee Perks
Most employees’ primary motivation when applying for a new bike is being able to spread the cost of a new bike and accessories while also getting a better deal.
The employee perks don’t stop there…
Reduce Commuting Costs
Riding a bike to work is cheaper than driving a car, especially considering all the potential extras, including parking fees or tariffs if travelling in clean air zones. Research by Halfords found that the average monthly cost of running and maintaining a car is £228. In comparison, an £850 bike purchased through the Cycle to Work scheme would cost approx. £48 per month (dependent on the hire period). That’s a cost saving of £180 per month that employees can use towards the rising cost of living.
Flexibility
Employees don’t just have to use their bikes to visit the office. The scheme has evolved to adapt to hybrid ways of working, so an employee could use it to cycle to a coffee shop if they plan to work there for a day or for their journey to a train station if it’s too far to bike to work.
Enhanced Physical Wellbeing
Cycling is an inclusive way to get healthier, fitter, and even lose weight. As a low-impact form of exercise, it’s ideal for those unable to run, and with electric options available, it’s perfect for all abilities.
Better Mental Health
Cycling is excellent for your employees’ mental health. Just like other forms of exercise, it releases those feel-good endorphins, reducing stress and improving sleep quality.
Financial Wellbeing
The salary sacrifice arrangement comes with many financial perks for employees. Being able to spread the cost over several months prevents them from paying outright or using a credit card, which will incur interest. Better still, they benefit from reduced tax and NIC contributions during the repayment period.
Transparent Terms
Our Cycle to Work scheme has no hidden costs, and once an employee completes the repayments, there’s nothing else to pay - the bike is theirs!
Inclusivity
Employees can review the repayment terms with their employer to ensure scheme repayments don’t take them below the National Minimum Wage.
Speed of Delivery
Once an employer approves the application, we can guarantee your employees’ letter of collection will be issued the next working day - in some cases - the same day.
Peace of Mind
Your employees will also receive unlimited lifetime safety checks on all cycles obtained through the scheme, a *Lifetime Guarantee on selected bikes, and an optional 14-day free insurance. With Cycle to Work, employees can upgrade their bikes and/or purchase accessories using the same application.
Employer Wins
A scheme for the business and the people! Here are some of the company and employer wins:
Reduce Employer National Insurance Contributions
With employer NIC rising to 15% in April 2025, the savings employers can make through salary sacrifice schemes have become a hot topic - for good reason. We tackle this subject in depth in our blog, ‘Salary Sacrifice and Your Business Cost-Savings Strategy’, across all our salary sacrifice solutions.
The main thing to remember is that the more employees enrol in your Cycle to Work Salary Sacrifice Scheme, the more savings you can make.
Implement a Sustainable Benefits Strategy
HR professionals are being encouraged to reduce spending while finding ways to support their workforce's physical, mental, and financial wellbeing. The need for a cost-effective and sustainable approach to employee-retaining benefits has never been more critical.
Improve Employee Retention and Attraction
Employees aren’t just reviewing salaries. They’re assessing the support available to help stretch that salary and enhance their wellbeing with a comprehensive benefits package. We recently ran a LinkedIn Poll asking employees what would attract them to a new job, and better pay and benefits were the second choice, behind an improved work-life balance.
Reduce Business Carbon Emissions
As part of your carbon footprint tracking, you measure how your employees travel to work. When employees opt to cycle over driving, it reduces your business’s C02 emissions, contributing to your sustainability goals. Potential employees, clients, and partners are seeking socially responsible companies and employers, and the more your people get on their bikes, the lower your business emissions will be.
Improve Employee Wellbeing
Cycling improves physical and mental wellbeing, and championing a Cycle to Work scheme in your business can improve the health of your workforce. Employees can get fit, achieve goals, beat stress and expand their social circle when they bring cycling into their everyday lives.
Boost Employee Engagement
When employees are happier and healthier, they’re more likely to bring their best selves to work, making them more motivated and productive. When you make this lifestyle affordable and accessible through employee benefits, you create a more loyal and grateful workforce, which boosts employee engagement.
Reduced Administration and Marketing Support
Enrolling your business in our Cycle to Work scheme will give you full marketing and communications support, driving employee engagement and scheme uptake.
The more employees who sign up, the more NIC savings you can make!
Our easy-to-use admin portal makes managing your scheme hassle-free, and the regular MI data we provide helps you understand the impact you’re making. We also have a UK-based customer service team to handle employee enquiries.
Scheme Controls
Our Cycle to Work Salary Sacrifice Scheme comes with different variables, from minimum and maximum LOC limits, repayment timelines and application windows. You can control them all, ensuring your scheme runs in a way that best suits your people and business.
Cost-Neutral and Free Implementation
If you have our Employee Discounts Platform, you can bolt our Cycle to Work Scheme on for *free. Employers cover the value of the LOC, but since employees repay in full, the benefit becomes cost-neutral to the business.
What Makes a Great Cycle to Work Scheme?
If you add a Cycle to Work Scheme to your employee benefits portfolio but don’t encourage participation, you’re not going to see results. That’s what makes a great Cycle to Work scheme - where it helps achieve your goals.
Don’t treat Cycle to Work as a tick-box exercise. Great schemes happen when you make them and have a partner by your side committed to seeing you succeed.
Understanding Your Employees
A Cycle to Work scheme will help your business make savings, but it needs to appeal to your employees if they’re to enrol, so understanding their perspective is vital.
We undertook research to gather insights on employees’ perspectives on the scheme, and here are some of the insights:
- 44% said they lived too far away to cycle.
- 13.8% said they didn’t have facilities for showering and changing at work after cycling.
We discovered much more than the two stats above, but they stand out for two reasons.
- To make your scheme great, you must educate employees on how they can bring cycling into their commute.
- Make the transition to cycling easier by ensuring you have the facilities. One way to get those facilities is by investing the scheme savings in becoming a cycling-friendly workplace.
People often ask which Cycle to Work Scheme is best for their people and business - is it OK to say ‘ours’ here? Many Cycle to Work Salary Sacrifice Schemes follow the same rules and processes, but not all are the same. Look for hidden fees and restrictions, such as at the end of hire.
The best Cycle to Work schemes come from partnering with a benefits provider who will ensure results.
Cycle to Work with Pluxee UK
We’ve established how Cycle to Work schemes and why they matter - to your people and business. You’ve also discovered the difference between partnering with a provider who works with you to make your scheme successful and ticking a box.
Let’s make your Cycle to Work scheme and salary sacrifice savings strategy great!
Notes: *Terms and conditions apply to retailer guarantees depending on the retailer chosen for the purchase of the bike, as well as whether we can implement your scheme for free.
