Bike to Work Scheme Calculator, 2026/27

How this is calculated

A Cycle to Work scheme works by reducing your gross salary by the bike's cost over an agreed hire period, usually 12 months, before income tax and National Insurance are applied. Because the deduction happens before tax, you never pay income tax or employee NIC on that slice of salary, which is why the effective cost of the bike ends up well below the shop price.

This calculator applies your marginal income tax rate using the 2026/27 bands and personal allowance, then adds employee NIC at the main rate on earnings between the primary threshold of £12,570 and the upper earnings limit of £50,270. The two savings are added together and divided across the hire period to show a monthly effective cost.

Running the scheme through your own company

If you run a limited company, you can operate a Cycle to Work scheme for yourself as a director-employee, provided the bike is available to all employees, and the total value normally stays under the £1,000 consumer credit exemption unless your company has consumer credit authorisation from the FCA. The company also saves employer NIC on the sacrificed amount, which is a genuine cost saving on top of your personal tax and NIC saving.

Keep a simple hire agreement on file confirming the sacrifice terms, the bike's value and the ownership transfer arrangements at the end of the period, since HMRC can ask to see this if it ever queries the benefit.

What happens at the end of the hire period

Most schemes offer to transfer ownership of the bike to you for a final payment based on HMRC's published valuation tables, which use the bike's age and original price. This final payment is usually small relative to the tax already saved, but it is a real cost that this calculator does not include because it depends on the scheme provider's specific table.

If you leave your employment or close your company before the sacrifice period ends, any outstanding salary sacrifice is normally deducted from your final pay, so it is worth checking the scheme rules before committing to a long hire period.

Do I still own the bike at the end of the scheme?

Not automatically. Most schemes hire the bike to you during the sacrifice period, then offer a final ownership transfer payment based on HMRC's fair market value tables, which is separate from the salary sacrifice savings shown here.

Can a sole director run this through their own limited company?

Yes, as long as the scheme is offered on the same terms to any other employees and the bike is used mainly for commuting. Most single-director schemes stay under the £1,000 exemption to avoid needing consumer credit authorisation.

Does salary sacrifice affect my pension or mortgage application?

It can. A lower gross salary may reduce pension contributions calculated as a percentage of salary and could affect income-based mortgage affordability checks, so mention any salary sacrifice arrangements to your lender or pension provider.

Is there a limit on how much I can sacrifice?

There is no fixed statutory limit for Cycle to Work, but your resulting salary must not fall below the National Minimum Wage, and most employers cap the bike value at £1,000 unless the scheme provider holds FCA consumer credit permissions.