Cycle to Work Scheme Calculator

If you are a founder or an HR manager thinking about setting up the Cycle to Work scheme without knowing exactly what it will cost you and what it will save your employees, then don’t roll it out. Using a cycle to work scheme calculator can give you a clear picture of the numbers.

In this blog, you can use our free bike to work calculator created for both employees and employers to know the exact figures about savings and National Insurance, along with everything you need to know before you set the scheme up.

Download the Cycle to Work Scheme Calculator for Excel

To understand the full impact of salary sacrifice on pay, tax, and pension contributions, download the Excel salary sacrifice calculator by entering your details to receive it via email.

How to use our cycle to work scheme calculator

This is the part most people are here for. Below, you can enter your bike, helmet, and any other equipment cost, along with your salary, age, hours worked, and how often you get paid, and the calculator shows you two things at once, what the employee saves and what the employer saves. No need to use two separate tools for it.

Enter Your Details

Add the cost of the bike, helmet, and any other gear separately, then pick the hire period. After that, fill in your salary, age, hours and weeks worked, and how often you get paid. If you have any other salary sacrifice already running, like a pension, add that too, since it can affect your numbers. Then choose whether you want to own the bike later or now at the end of the hire period.

Employee Savings Breakdown

Once you enter your details, you will see your total package cost, the amount that comes off your payslip each month, how much tax and National Insurance you saved, your net cost, and the percentage you saved overall. You can also switch between seeing this as one overall figure or broken down per pay period.

Employer Savings Breakdown

Switch to the employer view, and you will see the employer National Insurance savings, both per employee and across your whole team if more than one person is signing up. You will also see a note on VAT, since that depends on your company's setup, along with the HMRC fair market value table for what employees would pay to own the bike at the end of the hire period.

Download the Offline Calculator

If you want to run these numbers later, or share them with your finance team without opening the website again, you can download the offline version of this calculator. It works the same way, just as a file you can keep.

What is the Cycle to Work Scheme?

The Cycle to Work scheme is a UK government scheme through which employees get a bike and sometimes safety equipment, including gear like helmets or lights, without paying tax and National Insurance on the full amount.

This scheme was introduced so people can use cycles to go to work which is good for their health and also for the environment. Employers buy the bike first and the employee pays it back through small portions from their salary every month before tax, this way, both save their money. It's called salary sacrifice.

How the bike to work scheme works

Here is how it actually works, step by step, from the moment an employee picks a bike to the day the hire period ends.

For Employers

As an employer, you don't just hand over a bike and forget about it. Here is roughly what happens on your end:

• You sign up with a scheme provider, like Cyclescheme or Green Commute Initiative, or you can run it yourself if you have consumer credit authorisation.
• The employee picks a bike and equipment, usually from an approved retailer.
• Your company pays for the bike upfront.
• The employee's gross salary gets reduced each month over the hire period, usually 12 to 18 months, and that amount goes towards paying for the bike.
• Because the salary sacrifice comes out before tax, you also save on employer National Insurance, which is a nice bonus most employers don't realise until they actually do the maths.

For Employees

• For the employee, it is a lot simpler:
• You choose a bike within the limit your employer allows.
• Your gross salary gets reduced every month to pay for it.
• Since it comes out of your pay before tax and National Insurance, you end up paying less than you would if you bought the bike outright.At the end of the hire period, you can usually buy the
• bike for a small fee, called the fair market value, or just hand it back.

What Employers Need to Calculate Before Setting Up the Scheme

This is the part a lot of guides skip, but it's actually where HR teams get stuck the most. Before you roll the scheme out, there are a few things you need to work out properly.

Employer National Insurance Savings

Every time an employee's salary is sacrificed, your company also pays less employer National Insurance on that portion. It doesn't sound like much per person, but if you have a few dozen employees using the scheme, it adds up to a real saving over the year. This is one of the reasons why offering the scheme is not just good for employee wellbeing, it is genuinely good for your company's budget too. You can use our employer NI calculator to quickly estimate your NICs.

VAT Treatment

Whether you can reclaim VAT on the bike purchase depends on how your business runs the scheme and whether you are VAT registered. This part can get a little technical, so if you are not sure, it is worth checking with your accountant or your scheme provider before you commit to numbers.

Fair Market Value at End of Hire Period

At the end of the hire term, the employee usually has the choice to keep the bike by paying its fair market value. HMRC has a table for this, based on how old the bike is and what it originally cost. For example, a bike under 500 pounds is usually valued at around 18 percent of its original price after 12 months, and a bit less as more time passes. Employers need to know these figures in advance so they can tell employees what to expect at the end.

National Minimum Wage Compliance

This one is important and easy to miss. Since the salary sacrifice comes out of gross pay, you need to make sure it doesn't push any employee's pay below the National Minimum Wage or National Living Wage. If someone is on a lower salary, you might need to cap how much they can sacrifice each month, even if they wanted a more expensive bike.

Payroll and Admin Setup

Lastly, someone in your payroll team needs to actually set this up correctly and track it across the whole hire period, not just for the first month. Getting a provider involved usually makes this part easier, since most of them handle the paperwork and reporting for you.Getting the right payroll solution makes this much easier by handling most of the paperwork for you.

Benefits of the Ride to Work Scheme

No doubt, the bike to work scheme is beneficial for employees, employers, and the environment as well. Here is the breakdown of benefits for each one.

For Employers

Beyond the National Insurance savings, offering this scheme is a small thing that goes a long way for how employees see your company. It shows you care about their health and their money, and it can help with retention too, since benefits like this are often remembered even after the bike is paid off. It also fits nicely into any environmental or CSR goals your company is working towards.

For Employees

For employees, the biggest draw is obviously the savings, since a bike can end up costing 25 to 40 percent less than buying it outright, depending on their tax band. But beyond the money, cycling to work regularly also means better fitness, less stress from sitting in traffic, and honestly, just a better start to the day for a lot of people.

Environmental Impact

When every employee uses a bike instead of a car to go to work, it means less fuel will be burned and less traffic on the road. It's a small change on its own, but when a whole company gets involved, it adds up to a real difference over the year.

Final words

Cycle to work is a beneficial UK government scheme for employers and employees as well as for nature. And if you want a clear picture of how much you can save through your ride to work scheme, you can use our cycle to work calculator for free. Whether you are an employer who wants to know the NI saving through this scheme or just an employee figuring out the total saving on bike, you can use our calculator for free to get accurate numbers.