Cycle to Work Net Benefit Calculator (UK, 2026)

Calculate your true net saving on a Cycle to Work scheme bike including income tax + employee NI + employer NI treatment, minus the HMRC Fair Market Value (FMV) end-of-scheme fee if you keep the bike. Handles basic/higher/additional/Scottish tax bands, standard £1,000 cap vs FCA-authorised unlimited schemes, 12/18/24/36-month hire periods and commuter/hybrid/leisure bike categories.

⏱️ 3-5 minutes • 💪 Quick

Updated April 2026

How This Tool Works

📋 Purpose

The Cycle to Work scheme is usually advertised as \u201c42% off a bike\u201d. In reality the saving is smaller because HMRC requires a Fair Market Value (FMV) transfer fee when you want to keep the bike at the end of the hire period. This tool models the correct HMRC salary-sacrifice maths, the simplified FMV scale, and whether your employer\u2019s scheme is FCA-authorised (no cap) or standard (£1,000 cap), so you know the real net saving before you sign.

⚙️ How It Works

  1. 1
    Enter the total bike + accessories cost.
  2. 2
    Pick your tax band (rUK or Scotland).
  3. 3
    Enter your gross annual salary.
  4. 4
    Choose your salary sacrifice term (12–48 months).
  5. 5
    Confirm whether your scheme is FCA-authorised.
  6. 6
    Pick end-of-hire route: extended use (3% FMV) or transfer fee (HMRC scale).
  7. 7
    Click Calculate — see the real net saving and the difference vs the advertised 42%.

Cycle to Work — net benefit (2025/26)

Find out what you really save with the Cycle to Work scheme — after FMV transfer fee.

We model the HMRC salary-sacrifice rules correctly: income tax + employee NI savings, employer NI pass-through (if offered), and the mandatory FMV transfer fee at the end of your hire period.

Your scheme

Most employees do.

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Complete Guide: Cycle-to-Work Real Net Benefit

How to model your actual Cycle-to-Work saving honestly, including FMV transfer rules.

📅 Last updated: April 2026

Quick Tips

Jump-start your understanding with these essential tips

Extended-use agreements charge a flat 3% FMV. Transfer fee charges 18% in year 1 or 13% in year 2. Extended-use saves you typically £120–£250 on a £1,500 bike.

Employer NI is 13.8% on every £1 of sacrifice. Some employers pass it back as a bigger saving or a lower sacrifice. Always ask — it’s free money if offered.

At 40% income tax + 2% NI you save 42% gross before FMV. Net saving is typically 34–38%. Basic-rate taxpayers save 24–32% net.

Helmets, locks, lights, waterproofs, pannier bags can all be included in the sacrifice. Maximises your tax relief.

Most "standard" (non-FCA) schemes cap at £1,000. FCA-authorised providers (Cyclescheme, Green Commute Initiative) have no cap.

Step-by-Step Guide

Follow these steps to get the most from this tool

The scheme must be approved by your employer and (if over £1,000) run through an FCA-authorised provider.

Include helmets, locks, lights, high-vis. All are tax-deductible under the scheme.

Total incl. VAT. Don't deduct the sacrifice discount — the tool does that for you.

Most employees are Basic Rate (20%). Higher Rate is £50,271–£125,140. Scottish bands apply if your main residence is in Scotland.

Extended-use (3% FMV) is cheaper. Transfer fee (18%/13%/8%) is what older schemes still use.

Compare to the advertised figure. You'll see the advertised 42% is usually overstated by 5–10 percentage points once FMV is included.

Advanced Topics

Deep dives for advanced users

HMRC requires a transfer of ownership for the scheme to be tax-efficient. If the bike were simply given to you free at the end, it would count as a taxable benefit worth its full market value. FMV is HMRC's "simplified" way of capping that benefit so it doesn't wipe out the saving.

(1) If your post-sacrifice salary would drop below national minimum wage — HR will block it. (2) If you expect to leave the job inside 12 months — the final salary clawback often eats the saving. (3) Below £500 total — tax admin not worth it.

Sacrifice reduces your "reference salary" which can slightly reduce employer pension contributions (if calculated on post-sacrifice pay) and statutory maternity/sick pay. The effect is small but ask HR — some employers protect benefits from sacrifice.

Some employers offer a direct 25% tax-free travel-plan contribution instead of salary sacrifice. The maths is usually similar but simpler paperwork. Not modelled here.

See also Salary Sacrifice EV — same principle, applied to electric cars. Or Company Car vs Cash for a broader BiK comparison.

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