Cycle to Work: admin and client guide

This article covers the key information about the Cycle to Work scheme – how it works, how to manage it, and what to expect as an employer.

Cycle to Work is a government-backed scheme that helps employees get a brand-new bike and safety equipment, with the cost spread over monthly payroll instalments.

Reductions come from gross pay before tax – so employees save on income tax, National Insurance and, where applicable, pension contributions. No upfront costs and no credit checks.

Find more information here.

Cycle to Work NET works in a similar way, but deductions come from take-home pay after tax and NI rather than gross pay. There are no tax savings, but there's no minimum wage constraint either – making it accessible to employees who can't participate in salary sacrifice. It runs as an employer-provided loan.

Find more information here.

Both schemes run on the same platform and require no deposit or credit check. The difference is in how deductions work – and who can take part.

Salary sacrifice is the most tax-efficient option. Employees give up a portion of their gross salary in exchange for the bike, saving on income tax, National Insurance and, in some cases, pension contributions. Because reductions come from gross pay, employees at or near National Minimum Wage may not have enough headroom to participate.

Net Pay deduction is an employer-provided loan, deducted from take-home pay after tax and NI. There are no tax or NI savings, but there’s no minimum wage constraint – making the scheme accessible to employees who would otherwise be locked out.

Note: NHS and LGPS pension scheme members should be aware that salary sacrifice reduces pensionable earnings and may affect contributions.

Learn more here.

The employee experience is the same whether they’re on salary sacrifice or net pay – just with a different deduction method behind the scenes. Employees log in to Perkbox, select Cycle to Work, and are taken to the catalogue. From there they browse bikes and safety equipment, choose a repayment term, and submit their order for your approval. Once approved, the order is placed with the supplier within one working day.

Once an employee submits an order, it appears in Order Management in your Perkbox admin portal. By default you'll see pending orders, and you can filter by approval status, order status or search for a specific person.

The platform includes a built-in limitation calculator to check whether an order would take an employee below National Minimum Wage or National Living Wage, and tools to verify employee and order details before you approve or reject. You can also bulk approve or reject orders via CSV upload.

Find more information on approving orders here.

Access controls (eligibility) determine who can access the scheme – by job grade, probation period, or both. Spend controls (limitations) decide how much employees can order. Both are configured in the platform and apply automatically – employees only see what’s relevant to them, and the right deduction type is applied without manual intervention.

If you offer both salary sacrifice and Net Pay, eligibility rules automatically route employees to the correct scheme. Employee data (job grade, probation end date) is uploaded via the same CSV process as adding new employees, so no separate data entry is needed.

Useful links on access and spend controls:

Before the scheme goes live, you’ll need to set up a payroll element in your payroll system. For salary sacrifice this is a gross deduction element, and for Net Pay it’s a net deduction element. Both are straightforward and don’t require new systems or a dedicated admin resource.

Each month you’ll receive a payroll deduction report covering all active Cycle to Work orders. This tells you exactly what to process in payroll that period.

You can view an employee's hire agreement at any time by opening the relevant order and selecting the Documents tab.

Each monthly payroll report includes:

Employees can choose from 5,000 bikes and over 20,000 accessories online – including road, mountain, electric, folding, cargo and adaptive bikes – plus a wide range of safety equipment and components. They can also get a quote from a local independent bike shop (over 1,000 are partnered with us). They don’t have to order a bike – safety equipment or components on their own are also eligible.

Find more information about eligible bike and safety equipment here.

The End of Agreement Fee is the charge for the collection and disposal of the bike at the end of the hire period, as there is no right to ownership through the Cycle to Work scheme. Bikes may be sold for a fair market value at the end of the hire period under a separate agreement, although this cannot be guaranteed. The End of Agreement Fee paid may be offset against the fair market value due.

The End of Agreement Fee is mandatory and taken directly from net pay at the end of the initial hire period.

The Transfer of Ownership Fee is optional and paid via bank transfer if the employee decides to take ownership of the bike at the end of the initial hire period.

At the end of the hire period, employees will be contacted with their options, which under a separate agreement could include:

No guarantee of offer of ownership can be given to individuals at any point before or during the hire period.

We have a range of communications materials available to help you promote Cycle to Work to your employees – including email templates, posters and FAQs.

Useful links: