Tax Breaks on Expensive Bikes to be Capped in Budget
A plan is underway to limit tax benefits for high earners who use salary sacrifice schemes to buy pricey manual and electric bicycles. According to a report, Chancellor Rachel Reeves is set to introduce new limits on how much people can spend on bikes through the cycle-to-work scheme in this month's budget.
Critics argue that subsidising such purchases is not the most efficient use of taxpayers' money. One government figure said, "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.
The scheme, launched by Tony Blair's Labour government in 1999, allows employees to buy a bike and accessories with an interest-free loan from their employer. The cost is deducted from the employee's gross salary monthly, before income tax and national insurance are applied.
The scheme has been used to help save 42% of the cost of a bike for higher rate taxpayers and 30% for basic rate taxpayers. However, many retailers have reported that some high earners were taking advantage of the perk by buying bikes costing more than £10,000.
Retailers claim that imposing new limits could risk the progress of environmentally friendly travel. Will Pearson, co-owner of London-based Pearson Cycles, said, "The government should leave the scheme alone or, ideally, improve the incentives rather than restrict them." He argued that customers are more likely to consistently use their bikes if they're of a certain quality, reliable and efficient – often at a higher price tag.
A Treasury spokesperson has declined to comment on the plans.
A plan is underway to limit tax benefits for high earners who use salary sacrifice schemes to buy pricey manual and electric bicycles. According to a report, Chancellor Rachel Reeves is set to introduce new limits on how much people can spend on bikes through the cycle-to-work scheme in this month's budget.
Critics argue that subsidising such purchases is not the most efficient use of taxpayers' money. One government figure said, "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.
The scheme, launched by Tony Blair's Labour government in 1999, allows employees to buy a bike and accessories with an interest-free loan from their employer. The cost is deducted from the employee's gross salary monthly, before income tax and national insurance are applied.
The scheme has been used to help save 42% of the cost of a bike for higher rate taxpayers and 30% for basic rate taxpayers. However, many retailers have reported that some high earners were taking advantage of the perk by buying bikes costing more than £10,000.
Retailers claim that imposing new limits could risk the progress of environmentally friendly travel. Will Pearson, co-owner of London-based Pearson Cycles, said, "The government should leave the scheme alone or, ideally, improve the incentives rather than restrict them." He argued that customers are more likely to consistently use their bikes if they're of a certain quality, reliable and efficient – often at a higher price tag.
A Treasury spokesperson has declined to comment on the plans.
... as much as I love cycling & the eco benefits it brings, I can see why some ppl might say these high-end bikes are just luxury rides 
. £10k+ bikes? That's more than I'd spend on a decent car! Still, retailers are right that if you're gonna invest in a bike, you want a good one 
. Maybe instead of capping tax breaks, the gov could just make sure those schemes are transparent & not being abused by high earners? That way, everyone gets to enjoy some eco-friendly travel perks 
.
like i've got a mate who works for a bike shop in surrey hills and they're literally selling £10k e-bikes left & right 
and he's all like "duh the government is gonna limit how much tax break we get on these" 
anyway, my uncle just got this sweet new e-bike thru the cycle-to-work scheme and he's super stoked about it 
maybe he should've spent his 30k on a house like normal people 
lol
Meanwhile, regular folk can barely afford basic bike maintenance 
Anyway, I get why gov's trying to cap this, just don't wanna see more funds going down the drain 
.
. but at the same time, it's also true that some high earners are taking advantage of this perk by buying super expensive bikes 
instead of just capping tax breaks for pricey bikes. maybe they can offer more incentives for eco-friendly bike purchases or improve the scheme in other ways 
? i mean, retailers like Will Pearson mentioned that customers are more likely to use their bikes regularly if they're reliable and efficient 
My mate bought a sweet new bike last year and was saving like 40% on it because of the scheme 
.
. maybe instead of capping the tax break they could just make the scheme more transparent so we know who's getting the perk and how much 
. can we also talk about how cool is it that we even have such schemes for bike enthusiasts? i mean i'm just trying to get to uni on time without running over my cat 
Plus, if people are buying higher-end bikes because they want to use them regularly (not just for weekend rides), shouldn't that be seen as a positive?
. I think that's a fair compromise to reach.
It's easy to get caught up in the 'numbers' game but maybe we need to think more broadly about what matters most – people's experiences, their happiness and wellbeing...
But seriously, critics got a point – we shouldn't be footing the bill for luxury leisure. It'd be better if the scheme was more about promoting eco-friendly travel for regular folks, not just high-rollers 
. Limiting tax breaks would make sense, but maybe they could also improve the incentives for people to actually use the bikes 
!
? it's not like they're using them 2 commute 2 work every day 
anyway, i guess caps on bike subs make sense if ppl r just gonna splurge on fancy bikes