This is a bit complicated, and often much misunderstood by people. To fully understand why you need to read this section and the section below, “Who Are”

The Cycle To Work scheme is a a salary sacrifice scheme operated by the government to encourage people to buy bikes and cycle to work, although of course you don’t only have to use the bike for commuting! The very simple version of it is that your employer purchases a bike on your behalf and “rents” it to you for a period of 12 months.

You pay a rental fee each month of roughly 1/12th of the cost, so at the end of the 12 month rental period you’ve effectively purchased the bike. The neat bit is this monthly rental feee is deducted from your pay BEFORE tax and NI contribution, so it’s effectively reducing the amount of pay you’re taxed on. The upshot of this is you pay less tax, which when looked at another way reduces the price of the bike. Some employers will also cover the VAT portion of the purchase (20%), so you save that too! Typically a bike purchased on the Bike 2 Work scheme saves you around 20-30% of the overall price.