Thursday 1st August is Cycle to Work Day 2024. This annual effort to get more people out of their cars and onto bikes is promoted by Cyclescheme.co.uk.
The day is also intended to raise awareness of government-backed cycle to work schemes that can benefit both workers and employers.
What could cycling to work do for you?
In May 2024, we published an article on Walk to School Week, the initiative that aims to get people out of their cars and walking to school, wherever safe and appropriate. A bit of extrapolation across the school year showed that families could save over £400 a year by walking all, or part, of the way to and from school. Of course, there are also the health benefits that come from getting off one's behind and exercising. The approach of Cycle to Work Day provided a perfect opportunity for us to see whether a change from car to bike could offer similar benefits and savings.
How much money could you save by cycling to work?
Most people travel further to their place of work than children do to school. Consequently, the potential to save money on fuel, parking, tyre wear and other car-running costs is greater. Obviously, some journeys are too far to be practical by bike, but a 2022 survey by Project Solar showed that 75% of employees travelled 10 miles or less to work.
In 2022, Cyclescheme calculated that cycling to work could save £750 annually. A year later, new research from the Blackhawk Network found that potential annual savings had gone up to £1,262. The further you cycle, the more you could save.
What are the health implications of cycling to work?
Cycling provides cardiovascular/aerobic exercise. Peer reviewed studies indicate that cycling may do the following:
- Help achieve and maintain a healthy body weight by using up excess calories
- Help maintain, or even reduce, blood pressure
- Reduce the likelihood of dying from cardiovascular disease by up to 24%
- Reduce the likelihood of dying from cancer by up to 16%
- Reduce stress and promote healthy sleeping patterns
- Improve overall fitness and wellbeing
What is a cycle to work scheme?
Since 1999, the UK government has backed schemes that encourage people to cycle to work. There has long been an acknowledgement that poor fitness and lack of exercise amongst the population exacerbate the load on the NHS. Cycle to work schemes encourage people to cycle rather than drive, thus benefiting their health while reducing traffic congestion, pollution and emissions.
Cycle to work schemes offer participating employees a heavily subsidised means of getting a bike and associated accessories are operated by employers, who sign up to the official scheme. It's hard to believe but, in theory, everyone benefits from involvement, the employee, the employer, the government and the NHS.
Here's a summary of some direct and indirect benefits.
For the employee
- Save up to 42% on the cost of a bike and accessories.
- Spread the cost over time.
- The participant can get the cycle and accessories of their choice.
- Save money on car fuel and wear and tear on the vehicle itself.
- Improve fitness, wellbeing and overall health.
For the employer
- Free sign-up to the scheme.
- Easy administration.
- Save up to 15.05% in National Insurance contributions for every participating employee.
- Reduced need for employee parking facilities.
- Fitter, healthier workforce and fewer sick days. (Studies show that people who cycle to work on a regular basis take, on average, 1.3 fewer sick days per year.)
For the government
- Reduced load on the NHS.
- Reduction in pollution and emissions.
- Reduced traffic congestion.
- Reduced wear on road surfaces.
How does a cycle to work scheme work?
Cycle to work schemes are a form of "salary sacrifice". This means you get a benefit in return for a sum that is deducted from your salary regularly. In the case of Cycle to Work, the benefit is the bike. Essentially, your employer buys the bike up front and you hire it from them over a fixed period of (usually) 12 to 48 months. At the end of the hire period you will have the chance to buy the bike from your employer at an appropriate price. That price could be up to 25% of the cost of the bike and any accessories you acquired through the scheme.
You save money on the deal overall because, under the scheme, you will pay less tax because of the salary sacrifice element. If your gross salary is £1,500 and your salary sacrifice (i.e. your monthly hire payment to your employer for the bike) is £100, then you won't pay income tax on that £100 (as it comes out of your pay pre-tax). You will pay tax and National Insurance on £1,400 instead of £1,500.
Over the period of the scheme, the tax savings, and the total price you pay to your employer for bike rental and final purchase from them, will work out to save you money on the price you would have paid had you bought the bike outright without the scheme. That saving can be up to 42%, although it depends on the circumstances of each case.
To find out what you could save, use a savings calculator like the one provided by Cyclescheme.co.uk
What's in it for the employer?
Your employer pays National Insurance contributions on your earnings. Just as you will only pay tax and National Insurance on (in our example) £1,400 instead of £1,500, the same goes for your employer's NI contributions, thus saving them money too. With that and your salary sacrifice repayments to them for the bike, the scheme costs them nothing in the longer term.
How can you use a cycle to work scheme?
Check with your employer to see if they have a cycle to work scheme: many, if not most, do these days. If they don't, tell them about the benefits and ask if they'll consider signing up. They may thank you for it.
If your employer is already on board then the process will go something like this:
- Check with your employer to see if there is a limit to the price of bike and accessories under the scheme. Some are capped at £1000, some have no limit in theory.
- Pick the bike you want and the accessories you'll need, such as a helmet, lights etc.
- Tell your employer the cost and, if they ask, the details of what you want to buy.
- Take your voucher to a participating retailer and exchange it for your bike and gear.
- Your employer will arrange your salary sacrifice payments.
Can you benefit if you work from home?
If you work from home then, sadly, Cycle to Work isn't really designed for you as you don't … well … cycle to work.
There may, conceivably, still be ways you can benefit, especially if you work in the office one or more days a week. To qualify for a Cycle to Work scheme, the bike must be used primarily for riding to work, so if you only work at your employer's premises some of the time, and don't use the bike much for other things, you may just squeeze through a loophole. The best person to ask is probably your employer's accountant. There may also be a way for you to purchase a bike from your employer that they acquire through the scheme.
How homeworkers may or may not participate in Cycle to Work is rather hazy territory and is beyond the scope of this article. If it's an area you want to explore, we strongly recommend consulting an accountant as, if you go about it in the wrong way, HMRC could charge you tax for a benefit in kind.
The bottom line
A bicycle won't replace your family car for longer journeys, collecting the weekly shopping, trips out with the family or travelling in wet weather, but it can certainly offer a great alternative when the distance is reasonable, the traffic congested or the parking limited and overpriced.
If you have access to a bike already, why not give it a try on 1st August?
