Cycle to Work scheme stays the same despite rumours over financial limit in Budget

The Cycle to Work scheme will remain in operation in the UK with no budget limit, despite rumours and reporting to the contrary.

It was reported earlier this month that the scheme would have a financial cap introduced in Wednesday’s Budget, however there was no mention from the chancellor, Rachel Reeves, of it in her speech in the House of Commons. There was no further details in the Budget document, and the Treasury has confirmed to Cycling Weekly that there is no change planned.

In the UK, Cycle to Work allows people to save tax on new 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.

When the rumours over changes grew, a source told the Financial Times: “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.”

Launched in 1999, there was an initial cap of £1,000, but that was scrapped in 2019, with bikes becoming regularly more expensive. There were fears that a new limit would see many mid-range bikes taken out of the scheme, with e-cargo bikes and road bikes regularly costing well over £3,000.

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.

“This just feels like another attack on small business,” Dan Parsons of ebike retailer Fully Charged said after initial reports of the cap. “I’m worried to see what else comes out of this budget with, you know, a Labour government that, actually, we probably thought was going to do good things for the industry.”

A fortnight ago, Steve Edgell, chair of the Cycle to Work Alliance, said his organisation was “concerned” about reports of the cap.

“This would impact a vital and popular employee benefit which has enabled more than 2 million people to access cycle commuting since it was launched by a Labour government 25 years ago,” he said.