Reves set to cut cycle-to-work tax for high-income earners who buy expensive bikes
Rachel Reeves is preparing to measure the tax benefits available through the government’s popular cycle to work the system, amid scrutiny that high earners exploit luxury bicycles.
According to the Financial Times report, the chancellor is expected to introduce a cap on the number of bicycles that can be purchased using entitlements. Travel is likely to be announced in the next budget later this month, as the Treasury looks at ways to strengthen funding while still supporting green travel decisions.
A government official told the newspaper that the program should reflect its original purpose.
“The cycle should work should be about helping ordinary riders in green travel, not giving tax breaks to the top sellers of $4,000 hill climbs that shouldn’t trample the law on luxury recreation.”
Launched by Tony Blair’s government in 1999, the work cycle allowed workers to buy a bicycle and accessories with a no-interest loan from their employer, with monthly payments taken from Income tax and National Insurance.
Costs to the exchequer have risen sharply, from £55 million in 2019-20 to £130 million in 2026 million in 2024-25, prompting questions about whether the scheme still represents value for money.
The $1,000 purchase cap was removed six years ago after complaints that it excluded a variety of modern commuter bikes, including e-bikes and cargo bikes. As a result, moderate taxpayers can now save up to 42% on the cost of a bicycle, and basic taxpayers close to 30%.
But the absence of a roof has led the top earners to buy bikes costing more than
Traders warn, however, that putting a tight cap could mock the development in the ongoing movement. Pearson will be made by Pearson Pearson Cycles, told The Ft
“The government should leave the program alone or improve incentives rather than removing them,” he said. “Customers are more likely to use their bikes if they are of a certain quality, reliable and efficient. This often comes at a higher price tag.”
Environmental compasses also reveal that e-bikes – often more expensive than regular bicycles – are among the most effective tools for switching passengers away from cars, especially for long or hilly trips.
The Treasury is yet to comment.
