Bike purchase help in the UK in 2026: how the Cycle to Work scheme works

Checked on 26 October 2026: scheme rules in the official Department for Transport "Cycle to work scheme implementation guidance"; 2026 to 2027 National Insurance rates on gov.uk; end-of-hire values in HMRC manual EIM21667a. The DfT guidance gives worked examples using old National Insurance rates: our figures below use 2026 to 2027 rates.

In the UK there is no national public grant for buying a bike. What there is, since 1999, is the Cycle to Work scheme: a tax exemption that lets your employer hire you a bike and recover the hire from your gross salary. It is the British equivalent of the German Dienstrad or the Dutch fiets van de zaak, with its own rules.

How it works

1. Your employer joins the scheme, directly or through a provider (Cyclescheme, Cycle2Work, Bike2Work Scheme…).
2. You choose a bike and equipment from a partner retailer.
3. The employer (or provider) buys the bike and hires it to you: you do not own it during the hire.
4. You agree to a salary sacrifice: part of your gross salary is replaced by the hire, usually over 12 months or more.
5. Because that part of your pay is neither taxed nor subject to National Insurance, the bike costs you less.
6. At the end of the hire you can often buy the bike at a residual value, or extend the hire.

The legal basis is section 244 of the Income Tax (Earnings and Pensions) Act 2003.

The conditions to meet

The £1,000 cap has (almost) gone

For years, many people believed the scheme was capped at £1,000. For tax and National Insurance, there is no limit: the guidance is explicit. The limit that remains is regulatory: a hire agreement above £1,000 is regulated credit, which the employer can only offer if authorised by the Financial Conduct Authority (FCA) or by going through an authorised provider. In practice the big providers are authorised: a £3,000 e-bike goes through without trouble.

E-bikes and adapted cycles

Electrically Assisted Pedal Cycles (EAPCs, assistance up to 15.5 mph / 25 km/h, 250 W) qualify, as do tricycles and adapted cycles. A speed pedelec, which is a moped in the UK (registration with the DVLA, insurance, licence), does not. For the difference, see our 25 or 45 km/h article.

How much you really save

The saving depends on your income tax band and National Insurance. With 2026 to 2027 rates in England, Wales and Northern Ireland:

Example on an e-bike plus equipment at £2,000:

In Scotland, income tax bands are different (rates from 19% to 48%): the saving varies accordingly. On the employer's side, they save their own National Insurance (15% above the threshold in 2026 to 2027) on the amount sacrificed, which is why many companies sign up without hesitation.

Watch out: if your salary is close to the tax threshold, or if the sacrifice would take you below the minimum wage, the saving shrinks or the scheme is closed to you.

The trap: buying the bike at the end of the hire

The hire agreement cannot include an automatic transfer of ownership. At the end, the employer can offer you the bike under a separate agreement, paid from your net pay. The price must reflect market value; HMRC accepts a simplified scale:

Many providers instead offer to extend the hire (for example by three years) for a small fee, then transfer the bike at its value, which by then is negligible. It is legal as long as the exemption conditions are still met, but read the contract carefully: a 7% "ownership fee" on a £2,000 bike adds £140 to the cost. And if the employer gives you the bike for nothing, that is a taxable benefit in kind (form P11D).

Local schemes: marginal

There is no national grant, but a few local schemes exist:

• Scotland: an interest-free loan to buy an e-bike (eBike Loan), funded by Transport Scotland and run by the Energy Saving Trust. We could not confirm the maximum amount in force in 2026: check it on the site before committing.
• Local councils: some councils offer e-bike trial loans or reduced prices for low-income households. It is case by case.

If you are not an employee

The Cycle to Work scheme is only for employees on the payroll. The self-employed cannot use it; a bike used for the business may, depending on the case, be claimed as a business expense — check with your accountant. Retired people and students have no equivalent scheme.

Key takeaways

• No national grant for buying a bike in the UK.
• The Cycle to Work scheme saves around 28% (basic rate) to 42% (higher rate) of the price of the bike and equipment.
• No tax cap; above £1,000 you need an FCA-authorised provider.
• Buying the bike at the end of the hire is a separate purchase: do the maths before signing.

Compare with the European table, the German Dienstrad and the Dutch fiets van de zaak. To choose your bike, our 2026 city bike comparison.

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Is your Cycle to Work hire ending and you are offered the bike? Value your bike with L'Atelier to check what it is really worth.