🚲 Buying a Bike Through Your Limited Company: What You Need to Know
Whether you're a business owner looking to buy a bike for yourself or offer one to your team, 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 applicable)
❌ 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 reclaimable
No personal cost to the director (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 to for employees to get a bike. The business signs up with a scheme provider (e.g. BHN Extras), and employees sacrifice part of their salary (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 value (we suggest £1,000 including equipment).
✅ Pros:
Employees save tax — 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 you also offer Option 4 to all employees.
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 £5,000 carbon race bike) may attract HMRC scrutiny if they appear intended for personal use.