Cycle to work scheme implementation guidance for employers

24 June 2019


Earlier this month as part of Bike Week, the government announced that it would be refreshing guidance to help to increase the use of e-bikes to help tackle congestion, speed up commutes and cut travel costs.


The refreshed guidance from the Department for Transport is available to access on - Cycle to Work Scheme Guidance for Employers. It updates and clarifies the guidance last published in 2011 by the Department for Transport.


E-bikes have an integrated motor that helps a cyclist pedal, allowing them to reach speeds of up to 15.5 mph in the UK. They are seen as a game changer for their potential to make it easier for older or less fit people to make cycling a part of their commute. 70,000 e-bikes are reported to have been sold in the UK last year.


The refreshed guidance makes it easier for employers to provide bicycles and equipment including e-bikes worth over £1,000, by making it clear that Financial Conduct Authority (FCA) authorised third party providers are able to run the scheme on their behalf.


To promote healthier journeys to work and to reduce environmental pollution, the 1999 Finance Act introduced an annual tax exemption, which allows employers to loan cycles and cyclists' safety equipment to employees as a tax-free benefit. The exemption was one of a series of measures introduced under the Government's Green Transport Plan.


Since then employers have been encouraged to get their workforces cycling through loan and pooled cycle schemes, and now the Government has introduced a new era of green commutes with e-bike Cycle to Work scheme.


As well as boosting air quality and reducing emissions, switching from car, bus, tube or train to e-bikes, could save commuters an average of £7,791 over 5 years.



Salary sacrifice

Where a cycle and/or safety equipment is made available to an employee under a salary sacrifice arrangement there will be a consumer hire agreement in place which will typically be between the employee and the employer, or it could be with a third party, such as a scheme provider.


If it is with a third part this is likely to be a regulated consumer hire agreement under the Consumer Credit Act 1974 (CCA). The owner under the consumer hire agreement may need Financial Conduct Authority (FCA) authorisation.


There is an exemption from needing authorisation where the owner is the employer and the total value of the goods being hired does not exceed £1,000.  This exemption does not apply if the total value of the goods hired under the agreement exceeds £1,000. This is irrespective of the value of the salary sacrifice arrangement. The exemption also does not apply if the employer is authorised by the FCA for another separate regulated activity, or if the agreement is with a third party (such as a scheme provider), in which case FCA authorisation is needed. Schemes where the total value of goods hired exceeds £1,000 are acceptable provided the requisite FCA authorisation is obtained.


An Electrically Assisted Pedal Cycle (EAPC) can be included under the scheme. For further information on requirements for using EAPCs see


Note that there are different rules in Northern Ireland.



Government investment

Cycling and Walking Minister Michael Ellis announced an extra 2,300 cycle spaces to be built at 48 stations across England, enabling commuters to cycle directly to the station and lock up their bike securely. The investment is part of the Cycle Rail programme, now been backed by over £40 million from the Department for Transport. It has helped tens of thousands of cyclists to make their journeys to work joined up and sustainable.


The Cycle Rail programme has already tripled the number of cycle parking spaces at more than 500 stations, bringing the total to over 80,000.



Refreshed guidance

The Cycle to work scheme guidance for employers provides options on setting up a cycle to work scheme covering: benefits; eligibility; equipment; taxation and salary sacrifice and national insurance contributions.