This was introduced as part of the Government's Green Transport Plan to allow companies to provide staff with bicycles and safety equipment as a tax free benefit.  Safety equipment includes helmets, lights, luggage, locks, pumps, tools, clothing and almost anything else that could make the rider's journey safer.

The Cycle to Work Scheme allows each staff member to lease up to two bikes plus equipment to a total value of £1000.

How can I join the Scheme?
You choose your bike and accessories and sign a simple 12 month lease.

Will I have to cycle every day?
No.  The Department of Transport say that the employee must intend to use the bike mainly for work journeys, such as to the station, all the way to work, or from one workplace to another.

Can I use the bike for recreational purposes?
Yes.  You are not required to keep any records whatsoever of how you use your bike.  The view is that every journey made by bike is potentially one less by car.  Which means that mountain bikes, trekking and racing bikes are frequently supplied under the Cycle to Work Scheme.

How do I save tax?
The Government call the technique used under this Scheme a Salary Sacrifice.  You agree to a temporary change in your contract to allow your employer to provide bikes up to £1000 as part of your salary package for the next 12 months.  As the lease payments are made from your gross pay, you save income tax, national insurance and vat.

What are the financial benefits?
For lower rate tax payers choosing bikes and equipment worth £1000, the saving is around £330, making 12 payments of just £55 per month.  For higher rate tax payers, the saving will be nearly £400, with monthly payments of about £50 per month.  The final values may vary depending on costs and factors such as helmets which are vat free.

Can I buy the bike after 12 months?
At the end of the Scheme, your employer will still own the bikes and the equipment.  This is in your interest because if ownership automatically passed to you as an employee, you would have to pay tax.  In order for you to buy the equipment without paying tax, your employer must sell the bikes for Fair Market Value under a separate agreement to the Cycle to Work Scheme.  Typically, this would be around 5% of the bikes original price, which would be £25 for a £500 bike.

What happens if I leave the company before the end of the 12 months?
The lease is irrevocable which means that you would have to pay any outstanding money from your final pay.

What happens if the bike gets stolen or you have an accident?
It's just the same as if you were driving a car.  You are solely responsible for looking after the bike, for servicing it, locking it and riding it safely.  Most household insurances cover bikes, but you should advise your insurance company that you are using a bike under the Cycle to Work Scheme.

This covers the main points of the Cycle to Work Scheme.  Full details can be found at: http://www.bikeplanetuk.com/government.php