On June 14, the Department for Transport announced new guidelines for the Cycle to Work Scheme, which clarified adding funds to a Letter of Collection:
No, employees are not allowed to use their own funds towards the cost of goods being hired under a consumer hire agreement. This, however, does not preclude the employee from separately buying additional equipment.
For example, if an employee had a Letter of Collection for £1,000, they could purchase any bike up to £1,000. In the same transaction, they can add their own funds to purchase any equipment they desire.
If they wanted to purchase a bike that cost £1,200 with the same Letter of Collection, they could not add £200 of their own funds to get that particular bike. They would need to make another choice.