ACT among wave of concern from cycling industry bodies at potential Cycle to Work cap
Posted on in Cycles News
Cycling industry bodies have reacted with alarm to reports that the Government is considering re-introducing a spending cap on Cycle to Work purchases, a proposal expected to be examined as part of next week’s Budget.
The Cycle to Work scheme, introduced in 1999, allows employees to obtain a bike and accessories through salary sacrifice, providing significant tax savings and spreading costs over time, and was broadened in 2019 to make accessing higher-value bikes easier.
Sources suggest ministers are exploring a new upper limit on eligible bike values in a bid to help repair public finances, reviving a cap scrapped in 2019, though no figure has yet been confirmed.
Jonathan Harrison
Jonathan Harrison of the Association of Cycle Traders said a cap risked reversing progress: “In my opinion, introducing a cap undermines some of the scheme's success. You're going to reduce access to a lot of e-cargo bikes, cargo bikes and ebikes, which are often higher priced, but would generally be used for cycling to work. [Cycle to Work] does need reform, but this is not the right solution.”
The ACT has long highlighted that the scheme has been hugely important in boosting cycling participation and supporting the industry, while also stating that commissions charged by some providers are excessively high.
The organisation is urging Government to set any cap at a level that still allows meaningful commuter purchases, improve access for lower-income workers and SMEs, and bring more transparency to commissions so local shops benefit fairly.
Industry voices say genuine reform is needed, particularly as some providers charge retailers up to 15% of the bike’s value.
Dan Parsons of ebike retailer and ACT member Fully Charged said the discussed cap could wipe out a large portion of his sales, which rose from 5% to 40% via Cycle to Work once the old £1,000 ceiling was removed.
“This just feels like another attack on small business,” he told industry publication Cycling Weekly. “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.
“If for example, a cap comes in at £2,000… we don't stock bikes at £2,000 pounds or below. There is nothing in our store – and there are no good electric bikes out there really, under £2,000. So there is an issue. You could also argue that it's encouraging people to go back and buy the cheaper bicycles, or cheap converted bicycles with batteries on them, which is going to increase the battery fire issue.”
Parsons said his customers rely on e-bikes and e-cargo bikes as everyday transport rather than leisure kit, explaining: “These aren't hobbyists. Now we're selling cargo bikes to families instead of a car, who are buying them to take their children to school, to go to work, to do the groceries. It's a tool, which for me, is what active travel is all about and encouraging that is great.”
Steve Edgell, chair of the Cycle to Work Alliance, said his organisation was “concerned” by reports of the incoming cap. He said: “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.
“We are keen to work with the government to ensure the changes would not unintentionally damage the scheme and the significant benefits it delivers... Any new cap must not undermine recent efforts to ensure that everyone who wants to participate in the Cycle to Work scheme can do so easily."
Cycling UK also warned against the move, with Sarah McMonagle noting: “While capping the scheme may sound like a sensible way for ministers to save money, in reality, it will cost the government a lot more. For every £1 spent on the Cycle to Work scheme, we see over £4 in returns: boosting productivity, reducing sick days, and saving households money.
“With the popularity of e-bikes and cargo bikes soaring, supporting these trends is not just good for individuals, but for the economy as a whole. Any proposal to cap the scheme must consider people who require higher-cost cycles, such as cargo bikes or assisted cycles for disabled people. If the government is serious about providing equal access to active travel, it needs to tailor the scheme to take into account women, families, those with disabilities and people in lower paid or unstable work.”
For retailers seeking a fairer model, Gogeta – one of the ACT’s service providers – charges just 3% commission to help keep customer costs down and margins sustainable.
To learn more about Gogeta’s partnership with the ACT and how you can benefit from it, click here.