Reeves to put brakes on Cycle to Work scheme in blow to City
Chancellor Rachel Reeves could slam the brakes on the Cycle to Work scheme at the upcoming Budget in a blow to City commuters, it has been reported.
The Chancellor is expected to cut tax benefits on salary sacrifice schemes, including in the buying of expensive bikes, according to a report in 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,” a government official briefed the Financial Times.
“Taxpayers shouldn’t be footing the bill for luxury leisure.”
The change could see the Cycle to Work scheme lead to employees having to purchase cheaper bikes before getting the cost deducted in gross salary before tax.
It was introduced under Tony Blair’s government to encourage people to ditch cars and take a greener approach to travel in cities.
Higher rate taxpayers benefit from increased savings on the cost of a bike.
Cycle to work
HMRC estimated that the cost of the scheme rose to £130m in 2025 after thousands more claims were made.
The original £1,000 cap was scrapped in 2019, in order to improve the availability of e-bikes for workers. The decision prompted wealthier cyclists to take advantage of the scheme, per reports in various outlets.
But any change is likely to infuriate City workers who are keen to start cycling into work.
Mayor of London Sadiq Khan has made boosting cycling habits central to his plans to make London greener.
The Canada Corporation said earlier this year that 139,000 people were cycling a day as of October 2024, a 50 per cent increase from two years before. Since 2017, cycling in the Square Mile has increased by 70 per cent.
Its data also said there were now around twice as many bikes as there were cars on City streets during the day.
The Corporation’s transportation chief Shravan Joshi said air quality was improving as a result.
Cycling groups have also praised the cycle to work scheme, with the Cycle to Work Alliance claiming it had added £573m to the UK economy across retail, productivity, health and household savings.
A cross-party group of MPs have argued that the scheme should be widened to include freelance workers and pensioners to boost healthy living.