Rachel Reeves Plans to Limit Tax Perks for Expensive Bikes
Big changes could be coming to the UK’s cycle to work scheme, and it’s something that could affect both everyday commuters and cycling enthusiasts alike. According to recent reports, Chancellor Rachel Reeves is preparing to introduce new limits on how much people can spend on bicycles through the salary sacrifice scheme. The move is aimed at curbing what some see as excessive use of taxpayers’ money to subsidize expensive bikes, particularly high-end e-bikes and luxury models.
The cycle to work scheme, which has been around since 1999, was originally designed to encourage ordinary employees to swap car trips for greener, healthier travel options. It works by letting employees buy a bike and accessories through an interest-free loan from their employer, with the cost deducted from their salary before income tax and national insurance are applied. Over time, the scheme has proven popular: spending rose from £55 million in 2019–20 to £130 million in 2024–25. At one point, the original £1,000 cap was removed to accommodate the growing popularity of e-bikes and larger cargo bikes.
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However, concerns have grown that the scheme has been exploited by wealthier individuals buying luxury bikes costing thousands of pounds. Some high earners have reportedly purchased bikes exceeding £10,000, taking full advantage of the tax savings offered. Currently, the scheme allows higher rate taxpayers to save up to 42% of the bike’s cost, while basic rate taxpayers can save around 30%. Critics argue that this is not what the scheme was intended for. One government official told the Financial Times that “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.”
Bike retailers have expressed mixed reactions. Will Pearson, co-owner of London-based Pearson Cycles, cautioned that a new limit should be reasonable, noting that higher-quality bikes often come at higher prices. He emphasized that reliability and performance encourage more consistent use, which ultimately supports environmentally friendly travel. On the other hand, some officials are pushing for the change as a way to ensure taxpayers’ money is spent in line with the scheme’s original purpose.
As it stands, the Treasury has yet to provide an official comment on the proposed limits, but the policy could be unveiled in this month’s budget. If implemented, it would mark a significant shift in how the cycle to work scheme operates, potentially reshaping the incentives for UK commuters and changing the landscape for those investing in high-end cycling equipment.
In short, while the scheme was created to promote greener commuting, the focus may now return to making it accessible and fair for the everyday worker, rather than a perk for luxury bike buyers. The upcoming budget could signal the start of a more balanced approach to tax benefits for cycling in the UK.
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