Quick answer: Yes. HMRC’s guidance says electrically assisted pedal cycles (EAPCs) are covered by the tax exemption behind Cycle to Work. Your employer hires you the e-bike, often in return for a salary sacrifice, and you do not pay income tax or National Insurance on the benefit as long as the conditions are met. For tax purposes there is no limit on the value of the bike. You only get access through your employer, so ask your HR or payroll team whether they offer it.
What Cycle to Work actually is
Cycle to Work is not a grant or a discount scheme run by the government. It is the name commonly used for a tax exemption in section 244 of the Income Tax (Earnings and Pensions) Act 2003.
HMRC’s Employment Income Manual says that if an employer lends or hires cycles or cyclists’ safety equipment to employees, the benefit is exempt from tax if two conditions are met:
- the cycles or equipment are available generally to all employees of the employer
- employees use them mainly for “qualifying journeys”, which broadly means journeys to and from work and journeys for work
HMRC states plainly: “Electrically Assisted Pedal Cycles (EAPCs) are covered by the exemption.”
Which e-bikes count
The Department for Transport’s Cycle to Work guidance for employers says only cycles and cyclists’ safety equipment can be hired under the scheme, and that a cycle must not be a motor vehicle. An EAPC can be included.
That means the e-bike must meet the GOV.UK electric bike rules:
- pedals that can be used to move it
- a motor with a continuous rated power of no more than 250 watts
- no motor assistance above 15.5mph
An e-bike that does not meet those rules is legally a motorcycle or moped, so it is a motor vehicle and falls outside the scheme. The guidance also mentions adapted cycles, tricycles, hand cycles and cargo cycles, with or without electric assist, which can help disabled riders.
How salary sacrifice works
Most schemes use salary sacrifice. The DfT guidance describes it like this:
- you agree to give up part of your gross salary for a period, typically 12 or 18 months
- in return, your employer hires you the bike and any safety kit
- because the bike is a tax-exempt benefit, you do not pay income tax or employee National Insurance on the salary you give up
- your employer saves employer National Insurance on it
How much you save depends on your tax band and National Insurance rate. The DfT guidance includes worked examples, but it was published in June 2019 and its examples use the National Insurance rates of that time, so we have not repeated them. Ask your employer for an illustration based on current rates.
The conditions
The DfT guidance lists conditions that must be met:
- you must not own the bike at any point during the hire period
- at least half of the bike’s use should be for qualifying journeys. HMRC says employees do not need to keep detailed records, and it accepts the test is met unless there is clear evidence otherwise
- the offer must be open to the whole workforce, though not everyone has to use salary sacrifice
- your salary sacrifice must not take your pay below the National Minimum Wage or National Living Wage
The bike stays the property of your employer, or of the scheme’s operator, during the hire. The guidance recommends you insure it, or check whether your home contents policy covers it, and tell the insurer who owns it.
Is there a £1,000 limit?
Not for tax. The DfT guidance says: “For tax and National Insurance purposes there is no limit on the value of the cycle and safety equipment you can provide to an employee.”
The £1,000 figure you may see quoted relates to the regulatory rules for employers who run the scheme themselves. Above that value, different rules apply to how the hire must be set up. That is for your employer to sort out, not you, but it explains why some employers set a limit and others do not.
What happens at the end
The DfT guidance says that at the end of the hire period you may be able to:
- extend the hire
- return the bike and equipment
- buy the bike under a separate agreement made at that time
The guidance is firm that the original hire agreement must not include an option to buy, or give you any expectation that you will be able to. If it did, the arrangement could lose the tax exemption.
If you do buy the bike, HMRC has guidance on valuing it at EIM21667a. The DfT guidance includes a table of acceptable disposal values by age. For example, for a bike that cost £500 or more, it gives 25% of the original price after one year and 17% after two years. If you pay less than market value, the difference may be taxable.
Things to check before you sign
- Does your employer offer it? You cannot join on your own.
- The hire period and amount you will sacrifice each month.
- What happens if you leave your job. The guidance says your employer may ask you to pay what has not been recovered.
- Effects on other things linked to pay. The guidance says salary sacrifice can affect pension contributions and some state benefits, and that employers should explain this. The effect is likely to be small, but check.
- Battery safety. Choose a complete e-bike from a known retailer. See our guide to e-bike battery fire risk.
For more on e-bike rules and safety, see our e-bikes and scooters section.
Frequently asked questions
Can I use Cycle to Work if I am self-employed?
No. The exemption covers bikes provided by an employer to its employees.
Can I use the e-bike at weekends?
Yes. HMRC says other use, such as leisure, does not disqualify the exemption as long as it is not the main use.
Can I get two bikes?
The DfT guidance says an employee can hire two cycles, for example one at each end of a train journey, as long as both are used for commuting.
Does it cover helmets and locks?
Cyclists’ safety equipment can be included. The DfT guidance has a suggested list, and your employer decides what is eligible.
Sources
- EIM21664: exemption for bicycles, HMRC Employment Income Manual, GOV.UK
- EIM21667a: transfer of ownership of cycles, HMRC, GOV.UK
- Cycle to Work Scheme: guidance for employers, Department for Transport, June 2019
- Riding an electric bike: the rules, GOV.UK
Last checked: 19 October 2026
Image credit: Hugh Venables via Wikimedia Commons, CC BY-SA 2.0, cropped.
