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@kipsy
Take a look here Clive:- http://www.bikeforall.net/content/cycle_to_work_scheme.php
As for the commuting angle, yes you are correct, 50% of journeys should be made on the purchased bike. I commute in everyday from Richmond (on my £400 Wrongster!) and see plenty of full carb/titanium/custom steel bikes. Besides, whose employer is going to check what bike the employee rides to work on?
OFT LICENCE
The Office of Fair Trading has issued a group consumer credit licence to cover employers implementing Cycle to Work schemes. The ceiling via these licences is £1000. Download info from here. If companies already have a Consumer Credit Licence there is no £1000 ceiling.
EDIT: beat me too it Andy (coz I'm so old and fat?!!)
Bernard - I'm still very much favouring Colnagos Master X lite.