Cycle to Work is a Government scheme that provides a tax efficient method for your employer to help you to get a bike and associated safety equipment. The scheme is what is a called a salary sacrifice scheme (we explain more below) and it was designed to enable employees to lease a bike and equipment from their employer in order to cycle to work. Your employer buys the bike, leases it to you and then deducts the costs from your gross salary. However, because the deductions are from your gross salary it means that you pay less tax and National Insurance because you only pay tax and NI on your salary after the cost of the bike has been deducted first.
The amount you save will depend upon your salary; savings can be up to 42% for higher rate taxpayers.