The Cycle to Work scheme is an initiative by the UK government to encourage people to leave the car at home and cycle to and from work instead. The need to reduce carbon emissions and reduce the environmental impact of cars, has created a scheme that is a win win situation for all concerned.

Not only does the Cycle to Work scheme benefit you, as I will show, but it benefits your employer, the environment and the government.

How does the Cycle to Work Scheme work?

The Cycle to Work scheme is arranged through your employer. In essence, they buy a bike and safety cycling equipment that you chose and then hire it back to you over 12 or 18 months. Your employer deducts the hire charge from your monthly salary so you are gradually paying for the bike without having a large capital outlay.

The advantage is that the monthly salary deductions are taken before tax and National Insurance so your payments for your bike are tax free! If you pay the higher rate of tax, then your tax savings can be around 40% of the value of the bike and any safety gear that you might need.

At the end of the scheme, your employer retains ownership of the bike and equipment, however they might offer the possibility of selling it to you for a fair "market rate". As the market rate is often around 5% of the initial purchase price, you can see that you can make considerable savings on a bike and any safety gear such as a helmet and high visibility clothing.

Your commitments to the Cycle to Work Scheme

The Cycle to Work scheme isn't just a way of buying a great bike for a very low cost, you do have to make some commitments. The first commitment, is that you must agree to the monthly deductions from your salary over the term of the agreement.

The second commitment is that you must agree to use the bike to cycle to work around 50% of the time. That sounds like a lot of cycling, both in good weather and bad, however it is very unlikely that anybody will actually be checking exactly how you got to work everyday.