I just bought a new bike and topped up on the £1000 from the R2W scheme (although this was with
Evans rather than
Halfords), so I could buy a more suitable bike, my employer had no problem with it either. Although I would suggest you ask your HR department.
The other question of an employer keeping the bike, never heard of it, but they technically do "own" it, but if they refused to release the bike at the end, you could inform the R2W scheme and they might do something for you. Your employer does have the right to charge a nominal fee at the end of the Hire Purchase agreement.
But I would take "the enemy's" advice and look at other biks shops too, Halfords isn't to many people's taste!