Do You Own the Bike After the Cycle to Work Scheme?

The Cycle to Work Scheme is a great way to save money on a new bike, but many riders still wonder: Do you actually own the bike after the scheme ends? Ownership rules can be confusing, with HMRC guidelines, hire periods, and potential end-of-agreement fees to consider. This guide explains exactly who owns the bike during the scheme, what happens when your agreement finishes, and how you can officially make the bike yours.

 

Do You Own the Bike After the Cycle to Work Scheme? 

No, you don’t automatically own the bike when the initial hire period ends. Under the Cycle to Work Scheme, your employer purchases the bike and leases it to you through salary sacrifice, meaning legal ownership stays with them during the agreement. To take full ownership, you must choose an approved end-of-hire option. 

This usually involves either paying a final “Own it Now” or “Own it Later” fee based on the bike’s reduced fair market value, or entering an extended hire period that significantly lowers—or even eliminates—the final cost. These options ensure you can keep the bike while staying compliant with HMRC rules on tax-free benefits.

 

How Ownership Works in the Cycle to Work Scheme

Understanding how bike ownership works in the Cycle to Work Scheme is essential, especially once your tax-efficient hire period ends. At this point, you’ll need to decide what happens to the bike, and your choice can affect both your savings and long-term costs. The most cost-effective route is almost always the “Own It Later” option, which allows you to maximise savings—typically at least 25%—while keeping your end-of-scheme payment low.

Own It Later (Most Popular Option)

With this option, you pay a small refundable deposit—3% of the bike’s value for bikes under £500, or 7% for bikes over £500. After that, you pay nothing else, and once the bike reaches 4 years old, ownership transfers to you automatically. If you decide you don’t want the bike, you can return it and your deposit will be refunded.

Own It Now

If you prefer to take ownership immediately, you can choose to “Own It Now” by paying a Fair Market Value fee:

• 18% of the bike’s value for bikes under £500

• 25% of the bike’s value for bikes over £500

This option gives you instant ownership but usually results in higher end-of-scheme costs.

Return the Bike

If you no longer want the bike after your hire period, you can simply return it with no further payments required.

 

What Happens at the End of the Agreement?

When your Cycle to Work hire period ends, you must choose how to proceed with the bike. Most riders opt to pay a Fair Market Value (FMV) fee, which reflects the bike’s depreciated value and allows ownership to transfer legally in line with HMRC rules. If you don’t want to keep the bike, you can simply return it at the end of the agreement. These options ensure the scheme remains tax-compliant while giving you flexibility over long-term ownership.

 

What Is “Fair Market Value”?

Fair Market Value (FMV) is the HMRC-approved valuation used to determine how much you need to pay to take ownership of your bike at the end of the hire period. HMRC provides standard percentages based on the age of the bike and its original value:

• Under 1 year: 18–25% of the bike’s original value
  

• 2 years: 17%
  

• 3 years: 12%
  

• 4 years: 7%
  

• 5+ years: 3–7%

Providers often recommend a long-term extended hire to reduce the FMV payment. This allows you to take ownership later when the bike has depreciated further, significantly lowering the final cost while keeping the tax benefits intact.

 

When Do You Officially Own the Bike?

Ownership only becomes yours once you take a specific step at the end of the hire period. For many, this happens by paying a small Fair Market Value (FMV) fee at the conclusion of the initial hire, which usually lasts around 12 months.Alternatively, you can choose a longer route through an extended hire period, often spanning 3 to 5 years. 

This approach allows the bike to depreciate according to HMRC rules, reducing the final ownership cost. Once the extended hire finishes, or once you pay the FMV fee at the end of the initial hire, ownership legally transfers to you, and the bike is officially yours to keep.

 

How Much Does It Cost to Keep Your Bike?

The cost of keeping your bike depends on the FMV at the time you choose to take ownership. Here’s an example for a £1,000 bike:

• 1-year FMV (25%) → £250
  

• 3-year FMV (12%) → £120
  

• 4-year FMV (7%) → £70
  

• 5-year FMV (2%) → £20

Most employees use the extended hire option to reduce the final payment. In practice, this means that many riders pay a small final fee between £30 and £70, making ownership affordable while retaining the tax benefits of the scheme.

 

Does Every Cycle to Work Provider Handle Ownership the Same Way?

Not all Cycle to Work providers handle ownership in the same way. Most require a Fair Market Value (FMV) payment at the end of the hire period, but some offer extended hire options, allowing you to own the bike for a minimal fee — sometimes just £1.

Hire periods also vary, some providers allow up to 60 months, while others offer shorter terms. Always check your provider’s rules on ownership, extended hire, and final fees to know when and how the bike can become yours.

 

Pros & Cons of Owning the Bike After the Scheme

Owning the bike after completing the Cycle to Work Scheme can be a highly rewarding option, but it’s important to understand both the advantages and potential drawbacks.

Pros:

1. Cost-Effective Long-Term Ownership 

One of the biggest benefits of keeping the bike is that you gain a high-quality bike at a fraction of its retail price. By taking advantage of salary sacrifice savings and HMRC tax benefits during the hire period, the eventual cost of ownership is significantly lower than buying a bike outright.

2. Full Control and Flexibility 

Once you own the bike, you can ride it freely, modify it, or upgrade it as you wish without needing permission from your employer or scheme provider.

3. Sustained Savings Over Time 

Using an extended hire period or paying the FMV at the right time allows you to minimise the final cost, often paying as little as £30–£70 for a mid-range bike.

Cons:

1. End-of-Scheme Payment Required 

Ownership isn’t automatic. To transfer the bike from your employer to yourself, you must pay a fee based on HMRC Fair Market Value. While extended hire can reduce this fee, there is still a small financial commitment at the end of the scheme.

2. Limited Immediate Ownership 

You cannot sell or legally claim the bike until the ownership fee is paid or the extended hire period is completed.

3. Varies by Provider 

Each Cycle to Work provider may have slightly different rules and FMV calculations, meaning costs and procedures can vary depending on your scheme.

Owning your bike after the scheme combines the benefits of long-term savings, control, and flexibility, but it comes with the responsibility of a small final payment and the need to follow the scheme’s rules for ownership transfer. Understanding these pros and cons can help you make an informed decision about whether to keep your bike once your Cycle to Work agreement ends.

 

Conclusion

Do you own the bike after the Cycle to Work Scheme? Not immediately. During the hire period, the bike belongs to your employer or provider. Ownership is possible by paying the Fair Market Value at the end of the hire or using an extended hire period to reduce the cost. By understanding HMRC rules and your provider’s process, you can take full ownership in a cost-effective way, turning the bike you’ve been riding into a long-term asset to enjoy freely.