ACT update on speculation on Cycle to Work scheme changes
Posted on in Business News , Cycles News
Following numerous requests from members, here is an update on the speculation surrounding possible changes to the Cycle to Work scheme.
At this stage, nothing has been formally confirmed regarding a potential cap on the Cycle to Work scheme, and any decision ultimately rests with the Treasury. ACT is monitoring developments closely and will update members immediately if anything material changes.
The current scheme has delivered significant benefits for employees and the cycling industry, but it is not without challenges. Issues such as high retailer commissions, the restrictive “to work” element, and access for those on minimum wage have been raised by ACT over the past two years. However, the alleged introduction of a cap to address the Treasury’s concern that the scheme disproportionately benefits higher earners is not the right solution.
A low cap would severely restrict access to e-bikes, cargo bikes, e-cargo bikes, and adapted cycles for people with disabilities. ACT urges the Treasury to avoid a cap that excludes these categories. Reducing the cap could also have unintended consequences, potentially driving consumers toward substandard or illegal e-bikes that pose serious safety risks.
While the Treasury (supposedly) claims the scheme benefits high earners, HMRC data shows that two-thirds of participants are basic-rate taxpayers. Since the £1,000 cap was removed in 2019, the average transaction value is £1,661, with e-bikes averaging £2,270 and cargo bikes reaching up to £5,000. Purchases over £5,000 account for only 2.5% of sales, and just 6% of bikes cost more than £2,000.
ACT would welcome the opportunity to discuss the future of cycling tax incentives with the Treasury to ensure the scheme continues to support sustainable transport, wider access to cycling, and fairer terms for retailers.