Reeves set to curb cycle-to-work tax perks for high earners buying expensive bikes

"Rachel Reeves is preparing to scale back the tax benefits available through the government's popular cycle to work scheme, amid concern that high earners are exploiting the programme to buy luxury bicycles at the taxpayer's expense. According to a report in the Financial Times, the Chancellor is expected to introduce a cap on the value of bicycles that can be purchased using salary sacrifice arrangements."

"Launched by Tony Blair's government in 1999, the cycle to work scheme allows employees to purchase a bike and accessories via an interest-free loan from their employer, with monthly repayments taken from gross salary before income tax and national insurance are applied. The cost to the Exchequer has risen sharply, from £55 million in 2019-20 to £130 million in 2024-25, prompting questions about whether the system still represents value for money."

Rachel Reeves plans to introduce a cap on bicycle values purchasable via the cycle to work salary sacrifice scheme to curb perceived exploitation by high earners. The Treasury intends to tighten spending while still supporting greener travel, with the change likely to appear in the forthcoming Budget. The scheme allows interest-free employer loans repaid from gross salary and has seen Exchequer costs rise from £55 million to £130 million in five years. Removal of the original £1,000 cap six years ago increased benefits for higher-rate taxpayers and led to purchases of very expensive bikes, prompting ministerial concern and retailer warnings about potential impacts on sustainable travel.

Read at Business Matters