Cycle to Work Scheme
Rebecca Russell avatar
Written by Rebecca Russell
Updated over a week ago

What is a Cycle to Work Scheme?

Cycle to Work (C2W) is an employee benefit that some companies offer where an employee takes a hire agreement for a bike and cycle equipment.

The employer purchases the bike and equipment upfront as per the employee's order and then the employee repays in instalments via payroll as a salary sacrifice, making a tax and NI saving.

Who can Enrol in a Cycle to Work Scheme?

Any employee can be in the scheme but it is important to be mindful of:

  • Any employee who is close to the minimum wage as salary sacrifice will lower and employee's gross pay and therefore their hourly rate.

  • Any employee who is under the age of 18, some employers may ask that an employee under the age of 18 has a guarantor.

Cycle to Work Feature Overview

βœ… Cycle to work schemes can show in your payroll journals and you're able to run custom reports on C2W schemes too.

βœ… If an employee is leaving employment before the end of the cycle to work scheme, PayFit will automatically apply the remaining balance as a post tax deduction to their final payslip.

βœ… If a C2W deduction takes the employee below national minimum wage (NMW), PayFit will automatically change the deduction to a net pay deduction. This is a legal requirement to not let the employee fall below NMW. However it also means that the employee will not receive the tax savings that they would usually get if the cycle to work scheme is a salary sacrifice.

❌ Though PayFit allows you to input a C2W start date in the past, the app won't automatically back date payments. You'll need to use the 'additional deduction for the first month' box to include the backdated amount. We allow start dates in the past for new customers to show the real start date of the scheme but had already been paying into the C2W.

Video Overview (2 mins)

Step by Step: How to add a Cycle to Work for an individual

1️⃣ Head to My Employees > Pay Items > Enable More Pay Items

2️⃣ Toggle Cycle to Work > Press Save

3️⃣ Scroll down to Cycle to Work scheme > Add Cycle to Work scheme > Input Cycle to Work information > Click Next

When you input the start and end dates of the scheme, an information box will appear to let you know the cost of the deduction per month.

4️⃣ (Optional) Choose scheme ending if known. You're also able to skip this stage for now and answer in the scheme's final month.

How to add Cycle to Work Schemes in Bulk

My Company > Pay Items > Additional Deductions > Choose 'Cycle to Work' from the select deduction type menu > Add Schemes.

Once you click on 'Add Schemes', you can download the excel file to bulk import multiple schemes. When you're ready, re-upload this and the schemes will be applied to the relevant employees.

How a Cycle to Work Scheme will show on the Employee Payslip


How much can an employee purchase?

There is no longer a limit to the total amount of the bike and equipment can cost.

Can the employee change their mind?

This will depend on the arrangement the employer has in place but most cycle providers state that a hire agreement can be ended after 18 months (if the agreement is longer than this).

What happens if an employee leaves employment?

If an employee decides to leave, most hire agreements state that the final deduction for cycle to work should be taken in full from net pay.

What happens at the end of the hire agreement?

At the end of the hire agreement, the employee can choose if they wish to keep or return the bike.

If they want to return the bike there are no further deductions to be made from the employee.

What happens if I don't know what will happen to the bike at the end of the scheme when inputting it into PayFit?

You don't have to decide what will happen to the bike when inputting the C2W scheme into PayFit. We will notify you when the scheme ends to decide what will happen to the bike. If you're unsure what to select from the options, please reach out to our customer care team to support.

Can the zero-hours contract employees be added to the scheme?

Zero-hour contract employees don't receive the same benefits as permanent or fixed-term contracts as they fall under the status of 'worker' rather than 'employee' in most cases.

What if my employee takes out a C2W scheme but then never buys a bike so wants a refund? How do I repay their deductions?

C2W deductions are taken before tax and NI, so the admin will need to process a payment subject to tax and NI to return the money to the employee.
The steps to take are:

  1. Delete C2W this month so no more deductions are taken.

  2. Add an 'additional pay' pay item for the amount already paid- making that it is taxable & Niable but not pensionable.

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