• The Cycle to Work Scheme is a great way for cyclists working in the UK to save at least 32% on the cost of a bike and cycling equipment.

• The Cycle to Work Scheme is an employee benefit scheme set up by the government in 1999 that enables employers to ‘hire’ bikes and equipment to employees through salary sacrifice.

• The aim of the scheme is to get more people to commute to work by bike, promoting exercise while reducing pollution.

• In theory, your employer buys a bike for you to ride to work on while you effectively ‘hire’ it through salary sacrifice, allowing you to save money by not paying tax and National Insurance contributions on the monthly fee – much like a company car.

• At the end of the ‘hire’ period, you will usually be able to buy the bike from your employer for a nominal fee. In other words, the salary sacrifice is made from your gross salary, not your net salary.

• When the Cycle to Work Scheme first started, there was a price limit of £1,000 because many of the providers were not regulated by the Financial Conduct Authority (FCA).

• These days, most providers are FCA-regulated, meaning the limit is at your employer's discretion, with many opting to have no limit in place.

• Some employers may still have a set limit of £1,000, £2,000 or £5,000, including safety equipment because this reduces administrative costs.

As you have technically hired the bike from the scheme for the length of your agreement, you are left with a few options at the end of it:

• Enter into a new agreement, paying a small deposit to rehire the bike.

• Buy the bike from the scheme.

• Give the bike back.

Under HMRC rules, when buying the bike back at the end of the term you need to make a one-off payment to the scheme provider. This will depend on the initial value of the bike and how long you’ve been using it.

• If you leave your employer while the initial Cycle to Work salary sacrifice agreement is still in force, you’ll need to pay off the balance and usually the depreciated value of the bike too, if you want to keep it. You have the option to give it back to your ex-employer too.

• Depending on your scheme provider, you may be able to transfer your agreement to your new place of work.

• To take part in the Cycle to Work scheme you need to receive a salary through the Pay-As-You-Earn (PAYE) system.

• The scheme allows you to sign up as an employer and an employee, meaning directors of single-person limited businesses can join the scheme.

• Your PAYE salary needs to be above the National Minimum Wage after the salary sacrifice for the bike has been taken out to qualify for the Cycle to Work scheme.

• You cannot participate in the Cycle to Work scheme if you are a sole-trader because you will be paying tax and National Insurance once a year through a Self Assessment tax return.

• You can however claim the tax back on any bike bought for work purposes.