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.

Can employees use their own funds to put towards the costs?

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.

You can read the most up to date guidelines here.