Cycle to work scheme calculator
Calculate the monthly take-home pay impact, tax savings, ownership fee, and effective cost of buying a bike through a cycle to work salary sacrifice scheme.
Continue the hire for another 36 months after the salary sacrifice period ends, without any more pay deductions, then purchase the bike for a lower fee.
Other settings
Other settings
Results
| Monthly pay item | Without scheme | With scheme | Difference |
|---|---|---|---|
| Gross salary | £2,917 | £2,917 | |
| Cycle to work salary sacrificeC2W salary sacrifice | £0 | -£83 | |
| Adjusted salary | £2,917 | £2,833 | -£83 |
| Income tax | -£374 | -£357 | +£17 |
| Employee NI | -£150 | -£143 | +£7 |
| Take-home pay | £2,393 | £2,333 | -£60 |
Scheme period totals
| Item | 12 months |
|---|---|
| Cost of bike | £1,000 |
| Income tax saving | -£200 |
| Employee NI saving | -£80 |
| Ownership fee (7%) | £70 |
| Total net cost | £790 |
How to use the cycle to work scheme calculator
Enter the bike and accessories cost, salary, scheme length, ownership option, and any employer national insurance saving that is passed on. The calculator shows how the salary sacrifice changes monthly take-home pay and the final effective cost of the bike.
Steps
- Enter the total cost of the bike and qualifying accessories in the cycle to work package.
- Enter your annual salary before tax and deductions.
- Choose the scheme length and end-of-scheme ownership option.
- Add any employer national insurance saving percentage that your employer passes on.
- Use other settings for tax year, region, pension, student loan, tax code, benefits in kind, and other deductions.
Input notes
- Cost of bike and accessories
- Use the full cycle to work package value before tax savings, including the bike and qualifying cycle safety equipment or accessories.
- Annual salary
- Use your annual gross salary before tax, national insurance, pension contributions, student loan repayments, or any other payroll deductions.
- Scheme length
- The package cost is spread evenly across the selected salary sacrifice period to estimate the monthly payroll impact.
- End of scheme ownership
- Buy straight away applies HMRC's value at the end of the scheme length. Extend hire then buy adds a 36 month extended hire period before applying the ownership value.
- Employer NI saving passed on
- Some employers pass on part of their employer national insurance saving. Enter the percentage your employer shares, if any.
- Tax year
- The default setting is the current 2026/27 tax year but you can change this to see the results for the previous two years. Tax bands, allowances, and national insurance thresholds can change by tax year, so check this setting if you want accurate figures for a previous year.
- Scottish residence
- Choose yes if Scottish income tax rates apply to your employment income. Scotland has different income tax rates and thresholds than the rest of the UK so make sure to select this option for accurate results if you are a Scottish tax payer.
- State pension age
- People over State Pension age usually stop paying employee national insurance. Select this option to remove employee national insurance from the estimate.
- Student loan
- Choose yes if student loan or postgraduate loan repayments should be included in the take-home pay calculation.
- Student loan plan
- Plan 1, Plan 2, Plan 4, Plan 5 and postgraduate loans use different thresholds and repayment rates. Select every plan that applies.
- Workplace pension
- Select yes if you have a workplace pension. Pension contributions reduce the take-home pay shown in the headline results.
- Pension contribution
- Enter the employee pension contribution percentage. Percentage contributions use qualifying earnings between the annual lower and upper limits by default, but you can change this if your scheme applies the percentage to full salary. The calculator default is 5% as this is a common amount for auto enrolment pension schemes.
- Pension type
- Relief at source is an after-tax employee deduction with basic-rate tax relief applied inside the pension. This is common in auto enrolment pension schemes such as NEST or The Peoples Pension. Net pay reduces taxable pay. Salary sacrifice reduces taxable and national insurance pay.
- Use qualifying earnings
- Choose yes if your pension percentage is based on qualifying earnings between the lower and upper limits. Choose no if your employer applies the percentage to your full pensionable salary.
- Tax code
- Enter a PAYE tax code such as 1257L, S1257L, BR, D0, D1, 0T or a K-code. The calculator applies recognised allowance and rate instructions.
- Blind persons allowance
- Select this if blind person's allowance applies. The allowance of GBP 3,250 for 2026/27 is added on to the basic personal allowance.
- Benefits in kind
- Enter the taxable value of benefits in kind received e.g. a company car or private medical insurance. Do not use this if you have already entered a tax code that accounts for the benefit.
- Other salary sacrifice
- Enter salary sacrifice amounts here only if they are separate from the cycle to work package and any pension salary sacrifice already entered in the pension section.
- Other deductions before tax
- Use this for deductions that reduce taxable pay before income tax is calculated, such as some payroll benefit arrangements.
- Other deductions after tax
- Use this for deductions taken after tax and national insurance, such as repayments or workplace deductions. These reduce the final take-home pay shown.
What the results mean
- Net monthly cost is the estimated monthly reduction in take-home pay during the salary sacrifice period.
- Total taxes saved is the income tax and employee national insurance saving over the scheme period.
- Effective bike cost is the package cost less the tax savings and employer NI saving passed on, plus the ownership transfer fee.
- The monthly comparison table shows how gross pay, deductions, and take-home pay change with the scheme.
Common questions
Does cycle to work reduce my taxable salary?
Yes. The package is treated as salary sacrifice, so it reduces taxable pay and employee national insurance pay during the scheme period.
Will cycle to work affect my pension contributions?
It can. If your pension is based on post-sacrifice pay, the lower salary may reduce pension contributions. Some employers protect pensionable pay, so check your scheme rules.
Can cycle to work take my pay below minimum wage?
No. Employers must make sure salary sacrifice does not reduce cash pay below the relevant minimum wage.
What happens if I leave my job before the scheme ends?
Many schemes require the remaining balance to be settled from final pay, often without the same tax and national insurance savings. Check your employer or provider terms.
Can I include accessories as well as the bike?
Usually yes, if they qualify as cycle safety equipment or accessories under the scheme.
Why is there an ownership transfer fee?
Cycle to work schemes are hire arrangements. If ownership is transferred after the hire period, HMRC expects the transfer value to be at least market value or a simplified acceptable disposal value.
Does extending the hire period reduce the ownership fee?
Usually yes. HMRC's simplified values fall as the cycle gets older. This calculator assumes a 36 month extension when extend hire then buy is selected.
Does the calculator include student loan savings?
Student loan repayment changes are included in the monthly take-home pay comparison, but they are not included in total taxes saved or effective discount because lower repayments usually defer loan repayment rather than reduce tax.
Why is the student loan saving not included in total tax saved?
Lower student loan deductions usually defer repayment rather than reduce tax, so the calculator shows the cash-flow change but does not count it as a tax saving.
Why might my provider's quote differ from this calculator?
Providers can use different ownership options, fees, VAT treatment, employer national insurance sharing and leaving-employment rules.
Assumptions
- The cycle to work package is treated as a salary sacrifice that reduces taxable pay and employee national insurance pay during the selected scheme length.
- Total taxes saved includes income tax and employee national insurance only. Student loan repayment changes are shown in the pay table but are not treated as a tax saving.
- Employer national insurance saving passed on reduces the salary sacrifice needed to fund the package, using the employer Class 1 rate for the selected tax year.
- The ownership transfer fee uses HMRC's simplified disposal value percentages, using the total bike and accessories package as the original price.
- Extend hire then buy assumes a 36 month extended hire period after the selected salary sacrifice period, with no extra hire charge.
- If the ownership age falls between HMRC table points, the calculator interpolates on a sliding scale.
- Actual scheme providers can use different end-of-scheme options, administration fees, VAT handling, and leaving-employment rules.
Source notes
- HMRC Employment Income Manual EIM21667ASimplified approach and acceptable disposal value percentages for cycles sold to employees after the loan period.
- GOV.UK Cycle to Work Scheme guidance for employersCycle to work scheme guidance, end-of-hire options, employer national insurance saving, and Annex C valuation table.
- GOV.UK Salary sacrifice and the effects on PAYEGeneral salary sacrifice PAYE treatment and considerations.