🚲 Buying a Bike Through Your Limited Company: What You Need to Know
Whether you're a limited company business owner looking to buy a bike for yourself or offer one to your employees, there are several options — each with different tax rules, admin requirements, and costs.
This applies to both normal push bikes and e-bikes, and you can also include safety equipment such as helmets, locks, and lights.
🏢 Option 1: Personal Bike + Claim Mileage
This is suitable if the bike will be used less than 50% of the time for commuting or business journeys, or if you already own a bike personally and want to use it for work travel.
You can’t claim tax relief on the cost of the bike, but you can claim 20p per mile (HMRC-approved rate) for business journeys. Ordinary commuting is excluded.
✅ Pros:
No need to buy a new bike through the business
Simple process — no schemes or agreements
20p per business mile is tax-deductible
❌ Cons:
You cover the cost of the bike yourself
Mileage must be tracked accurately
Mileage rate not payable for ordinary commuting
🚲 Option 2: Pool Bike (On-Site and Available to Everyone)
The business buys a pool bike that is kept at a business premises and made available to all employees to use for commuting and business journeys.
This is not for one person’s exclusive use — it must stay at the workplace and be accessible to everyone.
✅ Pros:
Full corporation tax relief on the cost
VAT can be reclaimed (if on normal VAT scheme)
❌ Cons:
Must be kept at a workplace (not a home office)
The bike must be accessible to all employees
👥 Options 3 & 4: The Most Common Approaches
These two are the most commonly used routes. Under both, the bike must:
Be used mainly (over 50%) for commuting or business travel
Be available to all employees, even if only one person takes it up
Most businesses use a combination:
Option 3 for directors/owners
Option 4 for employees
👤 Option 3: Business Buys the Bike (No Salary Sacrifice)
Best for Directors/Owners
The business buys the bike directly and the director uses it for commuting and/or business journeys. The bike remains a business asset.
To qualify, the use of a bike must also be made available to all employees — usually by offering a Cycle to Work scheme (Option 4).
✅ Pros:
Corporation tax relief on the cost
VAT can be reclaimed (if on normal VAT scheme)
No personal cost, its funded by the business
❌ Cons:
If the employee or director leaves, or if the business closes, the bike must be sold at fair market value (plus VAT)
A bike must also be available to all employees — typically via Option 4
💼 Option 4: Cycle to Work Scheme (Salary Sacrifice)
Best for Employees
This is a very tax-efficient way for employees to purchase a bike. The business signs up with a scheme provider (e.g. BHN Extras), and employees sacrifice part of their salary (usually over 12 months) in exchange for use of the bike.
At the end, the employee pays a small ownership transfer payment (typically 3–7% of the bike’s original value) to take ownership after a further three years.
As the employer, you can set a cap on bike/equipment value (we suggest £1,000).
✅ Pros:
Employees save tax — for the 2025/26 tax year, income tax and NI savings currently range from 26%–47%
Employer saves on Employer’s NI (if applicable and not covered by the employers allowance)
❌ Cons:
No VAT saving for the business
More admin to run through payroll
Business pays upfront — employee doesn’t fund the cost initially
✅ Final Thoughts for Company Owners
For directors, Option 3 is usually the simplest route — as long as a bike is made available to all other employees (usually via Option 4).
Cycle to Work (Option 4) offers significant savings to employees, but requires more admin and upfront business funding.
Option 1 works best if you already own a bike or if business use will be below 50%.
Whatever you choose, remember: the bike must be used mainly for commuting or business travel, and it should be of reasonable value. Very high-spec bikes (e.g. a £4,000 carbon race bike) may attract HMRC scrutiny if they appear intended for personal use.