The UK Government has established a programme that offers tax savings to anyone who purchases a bike for commuting to work.
The details of the programme can be found here.
ESSENTIALLY THE SCHEME WORKS LIKE THIS:
1. The employee finds a bike from us that they would like to use to cycle to work.
2. The employer purchases the bike, as well as any accessories the employee needs to ensure a safe ride.
3. The employer loans the bike to the employee for a fixed period of time. The cost of the loan is set equivalent to the price of the bike, (maximum allowed without a Credit Licence: £1000). The employee pays the loan in instalments through a reduction in the gross monthly salary, called a ’salary sacrifice’.
4. The salary sacrifice yields lower PAYE and NI contributions to both employee and employer (NI only for the latter).
5. At the end of the loan period, the employer may make the equipment available for purchase to the employee for a fair market price.