Chancellor Rachel Reeves is set to introduce a new limit on spending through the cycle to work scheme, aiming to curb tax benefits for expensive bike purchases, according to a Financial Times report. The move comes amid concerns that the scheme, which costs taxpayers £130m annually, is being exploited by high earners buying luxury e-bikes.
The cycle to work scheme, launched in 1999, allows employees to buy bikes and accessories via an interest-free loan from their employer, deducted from gross salary before tax. The original £1,000 cap was removed six years ago, leading to a surge in claims for bikes costing over £10,000.
A government 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 scheme saves higher-rate taxpayers 42% and basic-rate taxpayers 30% on bike costs. However, retailers warn that a new cap could hinder green travel progress. Will Pearson, co-owner of Pearson Cycles, said: “Customers are far more likely to consistently use their bikes if they are of a certain quality, reliable and efficient. This often comes at a higher price tag.”
