"In either case, as long as any payment that the employee makes for the cycle is equal to or more than the market value, there will be no tax charge under the employment income rules. If the employee pays less than market value, the difference will be taxable as employment income. "
Assuming I pay zero at the end of the (1 year) scheme period then according to the above the difference between the market value and the amount I paid (zero) would be treated as taxable income i.e. I would pay 20% tax on that amount.
So :-
Bike cost £600
After 1 year fair market value = £600 * 25% = £150
I pay zero market value and thus incur a £150 taxable income hit.
I then pay 20% tax on this £150 == £30.
Sorry, it's early and presumably I've misunderstood, can someone clarify ?