Cycle to Work Finance for Employers

The Cycle to Work scheme is a UK government-backed salary sacrifice initiative that allows employees to hire a bicycle and approved cycling equipment through their employer. Axis Leasing supports employers by arranging compliant Cycle to Work and Cyclescheme funding that spreads the cost and delivers tax and National Insurance savings for employees.

Employees must be paid through PAYE and earn enough to ensure their salary does not fall below National Minimum Wage after salary sacrifice. Employers usually operate a registered Cycle to Work scheme. Axis Leasing works with employers and finance teams to ensure eligibility and compliance are clearly understood.

Axis Leasing has developed an unsecured Loan facility specifically for Cycle to Work Schemes. The loan agreement is underwritten in the name of the employer. The period of finance can range from 12 months upwards, although the norm is between one and two years.

Yes. The interest charged over the period of the loan is passed onto your employees. Your payments may mirror the employees’ contributions. A one-off administration fee is charged which cannot be passed to the employee. This is charged per scheme not per employee and is £150.

Yes. The scheme provider’s invoice shows the VAT that can be claimed back in the normal way

No. Government guidance states that the bicycle should be mainly used for commuting or work-related journeys, but there is no requirement to cycle every day and no mileage tracking. The bike can be used for pleasure and training. Axis Leasing advises employers on best-practice guidance rather than rigid enforcement. 

There is no statutory HMRC cap on Cycle to Work schemes. However, employers may apply their own limits based on internal policy. Axis Leasing can help employers structure Cycle to Work facilities that align with HR policy, affordability and workforce needs.

Yes. Electrically assisted pedal cycles (e-bikes) are permitted under Cycle to Work arrangements provided they meet UK legal requirements. Axis Leasing regularly supports employers offering e-bikes as part of their scheme.

Eligible equipment typically includes bicycles and safety-related accessories such as helmets, lights, locks, panniers and mudguards. The benefits provider advises employers on eligible equipment to ensure ongoing scheme compliance.

During the hire period, the bicycle is owned by the employer or scheme provider. The employee hires the equipment through salary sacrifice. Axis Leasing Cycle to Work documentation ensures that ownership and responsibilities are clear from the outset.

At the end of the initial hire period, employees are usually offered an extended hire period at a pre-determined cost, which depends upon the provider, and/or the option to take ownership by paying a small, HMRC-compliant ownership fee based on the age and value of the bike.

No. HMRC rules do not permit employees to add personal “top-up” payments. The full value must remain within the agreed Cycle to Work certificate. 

If employment ends before the hire period is complete, outstanding salary sacrifice deductions are usually taken from the final salary/severence. 

VAT treatment depends on the employer’s VAT status and the structure of the Cycle to Work scheme. Axis Leasing provides guidance on VAT handling, but full advice should be taken from the companies own accountants.