What’s the cycle to work scheme?
The Cycle to Work Scheme is a UK authorities initiative designed to encourage more healthy, greener commuting by making it cheaper for workers to get a motorbike and important biking tools. It really works by means of a wage sacrifice association, the place staff agree to surrender a portion of their gross wage in alternate for the usage of a motorbike, decreasing the quantity of tax and Nationwide Insurance coverage they pay. Employers buy the bike, and employees successfully “rent” it over an agreed interval, with the choice to take possession on the finish. The scheme goals to chop congestion, decrease emissions, and promote bodily exercise, whereas additionally serving to individuals entry high quality bikes at a considerably diminished value.
For those who’re a basic-rate taxpayer, you possibly can usually save round 32% on the price of your bike, made up of 20% revenue tax financial savings and 12% Nationwide Insurance coverage financial savings. For higher-rate taxpayers, the saving rises to about 42%, combining 40% revenue tax financial savings with 2% NI financial savings.
What’s occurring now?
The chancellor, Rachel Reeves, is reportedly making ready to cap how a lot staff can spend on bicycles by means of the Cycle to Work scheme, tightening the principles on salary-sacrifice advantages for each handbook and electrical bikes. In keeping with briefings reported within the Monetary Instances and shared within the Guardian, the transfer stems from issues that subsidising higher-value bike purchases will not be the very best use of taxpayers’ cash. The price of the scheme rose from £55m in 2019-20 to £130m in 2024-25 But the proposal raises an even bigger query: In a rustic desperately making an attempt to shift individuals into more healthy, greener, extra inexpensive modes of transport, is that this actually the coverage lever to drag? Earlier than the federal government places a restrict on what individuals can experience, it’d wish to contemplate what it stands to lose.
Is the scheme being abused?
In keeping with this text in The Guardian, One authorities determine informed The Monetary Instances: “Cycle to work must be about serving to strange commuters swap to greener journey, not giving tax breaks to excessive earners shopping for £4,000 e-bikes for weekend rides within the Surrey Hills. Taxpayers shouldn’t be footing the invoice for luxurious leisure.”
Quantitative and qualitative analysis printed in 2023 exhibits 67% of the individuals who have used the scheme are incomes beneath £49,999. In my opinion, this quashes the notion that the cycle to work scheme is being utilized by the rich, merely as a tax break, with solely 6% of the highest earners (≥£100k) making use of the scheme. Certain, there shall be just a few costly bikes being ridden across the Surrey hills, however sufficient to warrant an entire overhaul of the cycle to work scheme? Hardly.
Maybe the federal government must rethink its place and recognise the Cycle to Work scheme for what it’s: A transparent success. The 136% improve in scheme prices isn’t proof of abuse, however merely extra individuals are utilizing it, which is unquestionably the purpose, and let’s not overlook the rising value of bikes over the previous decade has naturally amplified that development.
With reference to ‘costly bikes’, though £4,000 could sound like some huge cash for a motorbike, we should stay aware that the price of every part has elevated considerably. A comparable sensible view of this may be to have a look at how the price of new automobiles has dramatically risen over the past decade. In keeping with an article written by Autocar, they are saying “over the previous 10 years, the typical checklist value of a brand new petrol automotive has soared from £27,035 to an eye-watering £45,218. That’s up 67 per cent, considerably greater than normal shopper value inflation and wage development.”
Grant Georgiades-Co-Founding father of Yellow Jersey and MD of The Plan Group
“I’m a passionate e-cargo bike person. I’m averaging over 120k monthly since swapping my second automotive to at least one round 3 years in the past. So, I’m all the time enthused once I see different households benefitting from the usage of one. Nonetheless, I’ve seen over time that it seems the customers are heterogeneous. Why are solely white, seemingly middle-class individuals driving them? The first cause I transformed was monetary. I used to be spending round £250 a month to run a automotive that hardly did any mileage, and the journeys it did carry out could possibly be finished on a practice, bus or bike. The e-bike supplied the comfort of avoiding jams on Lewisham’s congested native roads, plus the added satisfaction of decreasing emissions.
However, the primary driver (no pun meant) of the choice was value saving. I used the experience to work scheme and I paid off the bike buy in 12 months. It was value impartial within the first 12 months in comparison with the automotive. And now, aside from just a few servicing payments, I’m 3k a 12 months up in opposition to the price of a small run round. So why aren’t extra low-income households utilising a cargo bike?
Properly, a part of the reply to that query was in my opening sentence. I used to be capable of justify shedding the second automotive. But, most households, even in London with its abundance of public transport, nonetheless really feel the necessity to have entry to a automotive. I perceive that want. However may a greater structured cycle to work scheme tempt them away from that pondering? Straightforward for me to say, I do know, however I consider a excessive variety of individuals would profit from the swap.
For the uninitiated, the preliminary buy value of a cargo bike is excessive. So my pondering is {that a} cycle scheme that gives much more beneficiant help to households with decrease family revenue is perhaps what is required. This may start the method of convincing individuals to present it a go. As soon as they’ve tried, I believe they’ll see the deserves of persisting”
A drop within the ocean
At a time when the Spending Overview 2025 exhibits the federal government is massively rising funding in public companies, transport, and long-term infrastructure, it’s all of the extra bewildering that the Treasury is popping its fireplace in opposition to cyclists. In keeping with the evaluate, whole departmental budgets will develop by 2.3% in actual phrases over the SR interval.
In the meantime, for transport capital, the federal government is pumping in big sums: for instance, £2.3 billion is dedicated by way of the Native Transport Grant in section 2 for enhancements that explicitly embrace “cycleways and congestion enchancment measures.”
In that context, singling out the Cycle to Work scheme, a comparatively modest tax incentive for trimming, is puzzling. Reasonably than undermining a coverage that promotes energetic journey, public well being, and lower-carbon commutes, the federal government ought to double down on the very infrastructure it claims to prioritise. The evaluate additionally allocates £15.6 billion by 2031–32 to city-region transport authorities, supporting zero-emission buses, trams, and native rail- infrastructure that, if paired with sturdy incentives for biking, may rework how individuals transfer round our cities and cities.
Reducing again on the Cycle to Work scheme dangers not solely decreasing the variety of new cyclists (and with them the well being, congestion, and local weather advantages), but additionally undermining the financial and social return on the very capital investments the federal government is bragging about. If Reeves and her staff are critical about “renewal,” then strangling one of the environment friendly levers for switching to inexperienced transport is unnecessary, particularly when far bigger spending pots are forgoing that type of behavioural payoff.
What are your ideas? Have you ever used the cycle to work scheme? Do you assume there must be an higher restrict to the bicycle worth allowed. We’d like to know, so please tell us within the feedback.
