On your bike: the benefits of workplace cycle schemes

11 June 2024

Cycle to work schemes are a powerful tool for boosting employee well-being as well as an employer’s bottom line, says Adrian Warren, senior product director, BHN’s Cyclescheme at Blackhawk, ahead of Cycle to Work Day on 1 August

In today’s economic climate, with the lasting effects of the cost-of-living crisis continuing to squeeze budgets and employee well-being becoming a top priority, businesses are constantly seeking innovative ways to support their workforces. One often overlooked solution with significant benefits for both employees and employers is the cycle to work scheme.

What is a cycle to work scheme?

The first question on many people’s lips is, what is a cycle to work scheme? It’s a salary sacrifice benefit that gives employees savings on a bike and other related cycling equipment. The scheme removes the traditional barriers of borrowing, meaning employees can loan the money to purchase their bike from their employer, without the need for lengthy credit checks.

The term salary sacrifice scheme in this context means that rather than paying tax on money earned and then buying a bike, employers can lower the amount of income that employees are taxed on by giving up part of their salary before paying tax.

How does a scheme work?

With some providers, cycle to work schemes are free for both employees and employers to join and are available to businesses of any size, from start-ups to huge enterprises. Most of the time the only qualifying factor is that employees must be paid via pay as you earn.

Once the employer has signed up and chosen a limit (the maximum amount an employee can request), employees can get started. When the employee has chosen their bike package, which has been approved by their employer, the business will pay the upfront cost of the item. Following this, employees will begin repaying the cost from their salary, interest-free, over a period of 12 months in most cases.

And to keep things even simpler, cycle to work providers can also handle the entire end-of-hire process, meaning employees can either take ownership of the bike or return it hassle-free. Special attention will need to be given to any tax implications of this decision.

The financial squeeze and the rise of cycling

Now we’ve established what a cycle to work scheme is and how it works, it’s also important to understand why employees need and want access to them.

The daily commute, already a potential source of stress, has become a full-blown ordeal for many. Skyrocketing travel costs, particularly for train tickets (with 85% of commuters reporting an increase in average daily fares in 2023) are forcing a change in commuting habits. More than half of employees are actively considering altering their daily routines, with the majority (60%) looking to switch to a different mode of transport.

The good news is that geography often works in our favour. Nearly all commuters (97%) live and work within the same region, making cycling a realistic alternative for many. This trend is already underway, with almost a quarter (23%) of workers walking or cycling more frequently to save on car or public transport costs.

In fact, a substantial 56% of commuters have either started cycling to work or are seriously considering it, with cost reduction being the primary motivator. This represents a major jump from 2022 (47%), with numbers climbing even higher in Greater London (68% compared to 63% in 2022).

Why businesses should embrace cycle schemes

Beyond the obvious financial benefits for employees, cycle schemes offer a wealth of advantages for businesses.

Cycling has been proven to have a positive effect on mental well-being. The stress of a costly commute can significantly impact employee well-being. By offering a cycle to work scheme, you demonstrate your commitment to supporting your workforce financially and physically. Cycling is a fantastic form of exercise, promoting cardiovascular health, muscle strength and weight management. Employees who ride to work are likely to experience increased energy levels, improved mood and a reduced risk of chronic illnesses. This translates into a healthier, happier and more productive workforce.

Studies consistently show a link between physical activity and reduced absenteeism (see https://ow.ly/BMUh50ROJ4I) in the workplace.

People who cycle to work are less likely to take sick days, benefiting both your team’s morale and your company’s bottom line. On top of this, cycle schemes are increasingly seen as a desirable employee benefit, assisting in retention and recruitment. By offering a scheme, you position your company as one that prioritises employee well-being and sustainability. This can be a game-changer in attracting and retaining top talent. Finally, by encouraging employees to cycle, you contribute to a greener and more sustainable future. This is an attitude that’s essential in 2024.

Taking action: implementing a scheme

Implementing a cycle to work scheme is a straightforward process, with most providers offering all the necessary resources and support to get you started. This simple step can have a profound impact on your employees’ well-being, finances and the environment.

Typically, cycle schemes involve a simple step-by-step process. Firstly, companies would look to gauge their employees’ interest before signing up. These organisations would then register their interest by creating a free account. Following this, interested employees would choose their desired bike or accessories from a participating retailer. This request would come through to their employer to review and approve. The employer would then pay the upfront cost to the retailer and deduct the agreed amount from the employee’s salary over the specified period.

By signing up, employees have agreed to a salary sacrifice, spreading the cost of the bike and accessories over their pay periods, with tax and National Insurance savings. With many schemes, once the employer has paid for the items, employees will receive a scheme-specific certificate, by email, to redeem in-store or online at retailers nationwide. Finally, the employee will begin cycling to work, building business productivity and well-being. When organisations are looking for a cycle to work scheme it’s important to choose one with a fully digital journey and a wider range of bike retailers to give your employees the widest choice. Overall, these schemes offer a win-win situation for both businesses and employees. By promoting a healthier, happier and more financially secure workforce, they can contribute significantly to your company’s success. With rising travel costs and increasing employee well-being concerns, there’s never been a better time to explore implementing a cycle to work scheme in your organisation.