Reviewed by Mustafa Bilgic
Founder, WebCalculator · Last updated 26 July 2026
Tax savings based on 2026/27 Income Tax and NI rates from HMRC. Scheme rules per GOV.UK guidance. Not financial advice.
The Cycle to Work scheme lets you buy a bike through salary sacrifice, saving 28% to 42% on the price depending on your tax band. Enter the bike cost and your salary below to see exactly how much you save on Income Tax and National Insurance in 2026/27. A basic-rate taxpayer saves £280 on a £1,000 bike; a higher-rate taxpayer saves £420.
Bike price and your salary
Your employer purchases the bike and you repay it through salary sacrifice — a deduction from your gross pay before tax. Because the sacrifice reduces your taxable income, you avoid paying Income Tax and National Insurance on that amount.
For a basic-rate taxpayer earning under £50,270, the saving is 28% (20% IT + 8% NI). For a higher-rate taxpayer earning above £50,270, the marginal saving is 42% (40% IT + 2% NI). Additional-rate taxpayers (over £125,140) save 47% (45% IT + 2% NI).
On a £40,000 salary you are a basic-rate taxpayer:
Your employer also saves 15% employer NI (£225 on £1,500), which is why most employers are happy to offer the scheme. For other salary sacrifice benefits, see the salary sacrifice calculator or the EV salary sacrifice calculator.
A basic-rate taxpayer saves 28% (20% Income Tax + 8% NI) on the bike price. A higher-rate taxpayer saves 42% (40% IT + 2% NI). On a £1,000 bike, that is a saving of £280 or £420 respectively.
Your employer buys the bike and you repay it through salary sacrifice over 12 months (sometimes longer). Because the deduction comes from your gross pay before tax, you avoid Income Tax and National Insurance on that amount.
There is no legal limit on the value of a bike in the Cycle to Work scheme. However, individual scheme providers may set their own caps. Many now offer up to £5,000 or more, particularly for electric bikes.
Technically the bike belongs to your employer during the hire period. At the end you can usually buy it at a fair market value — HMRC guidance suggests 18% of the original price for bikes used for 3 years, or 25% for 1 year.
Yes. Electric bikes (e-bikes with pedal assistance up to 15.5 mph) qualify for the Cycle to Work scheme. The higher cost of e-bikes means the tax savings can be substantial — a £3,000 e-bike could save a higher-rate taxpayer over £1,260.
Salary sacrifice reduces your gross pay, which may slightly lower pension contributions if your workplace pension is based on qualifying earnings. The impact is usually small — on a £1,000 sacrifice, the pension reduction is about £30–£80 over the year depending on contribution rates.