A budget cap is expected to be imposed on the Cycle to Work scheme in the upcoming Budget, it has been reported.
The scheme, launched in 1999, allows people in the UK to save tax on bikes by ‘loaning’ them from their employers, allowing prospective cyclists to save up to 42% on the cost of a full price bike, with payments automatically deducted from their salary.
One source said: “Cycle to Work should be about helping ordinary commuters switch to greener travel, not giving tax breaks to high earners buying £4,000 e-bikes for weekend rides in the Surrey Hills. Taxpayers shouldn’t be footing the bill for luxury leisure.”
The initial cap of £1,000 was binned in 2019, with bikes becoming regularly more expensive. However, it seems some kind of limit will be reintroduced; it might see many mid-range bikes taken out of the scheme, with e-cargo bikes and road bikes regularly costing well over £3,000.
According to the FT, there were 209,000 claims through the scheme in 2023-24, up from 167,000 in 2019-20. The amount of money the Cycle to Work scheme cost rose from £55 million in 2019-20 to £130 million in 2024-25.
Last month, data from the Cycle to Work Alliance showed that the system brought £219 million in bike and accessory sales last year. The analysis also showed that it brings the British economy £573 million in annual economic benefits across retail, productivity, health, and household savings.
The UK government makes £4.40 on every pound put into the scheme, according to the research, and a significant proportion of those using the scheme, over a third, were buying their first bikes.
