A NEW loan scheme has been launched by Oxford City Council to help staff buy new cycles.

Many of the authority's 1,400 staff have been offered the tax-free loan initiative - in the hope that more of them will ride to work.

The radical scheme - called a 'salary sacrifice' - works by employees effectively taking out a Town Hall loan to buy new cycles.

But because the repayment arrangements are so favourable, they end up saving money on the amount borrowed.

The loan - to a maximum of £750 - is tax-free and gross salary deductions are made over an 18-month period.

Employees make savings on the price of the cycle because they don't pay income tax or National Insurance on the loan.

In essence, those participating get a brand new cycle for a vastly reduced price. The city council has calculated a £500 cycle would end up costing just £340.27.

James Styring, spokesman for Oxford cycling pressure group Cyclox, said: "This scheme makes it very easy for people to get a decent bike and pay for it over time.

"Anyone remotely connected with cycling thinks it's brilliant. People have decided to buy better bikes than they would normally be able to afford - and are much keener on cycling as a result."

The scheme is the latest attempt by the city to showcase its green credentials and cut city centre pollution.

Earlier this year many employees participated in the city's Car Free Day - leaving their cars at home and using public transport or bicycles instead.

The 'salary sacrifice' scheme is being taken up by a number of organisations across the city, including the two universities.

Georgia Bushell, 32, who works for Summertown publishers Harcourt, has already signed-up to a similar scheme.

She said: "The benefit is that employees get a large percentage of the price of the bike paid for. It's a new bike for half price."

City councillor Jean Fooks, executive member for a cleaner city, added: "This is a very good idea - anything we can do to help people cycle has to be encouraged."