'This feels like another attack': industry laments new Cycle to Work budget cap

Bicycle retailers and industry bodies have responded with concern to government plans to reinstate a cap on tax-saving purchases made via the Cycle to Work scheme.

Originally set at £1,000 upon the scheme's launch in 1999, the cap was removed in 2019 as it was seen as restrictive, particularly for those who wanted to buy ebikes or e-cargo bikes.

Now, a new cap is expected to be introduced in next Wednesday's budget as chancellor Rachel Reeves seeks to plug a major hole in the nation's finances.

Exactly what that cap will be is yet to be announced, but needless to say the idea has not gone down well with those inside the cycling industry.

Dan Parsons of ebike retailer Fully Charged told Cycling Weekly that since the removal of the cap, the number of sales he made via cycle to work had jumped from five to 40% – and that those could potentially be decimated by a cap.

"This just feels like another attack on small business," he said. "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."

He added: "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."

Far from being Mamils looks for a cheaper way to an expensive weekend ride, Parsons said the customers he was selling ebikes and e-cargo bikes to were using them as serious transport.

"These aren't hobbyists," he said. "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" about reports of the cap.

"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," Edgell said in a statement.

He added: “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 responded to the news, with Sarah McMonagle telling Cycling Weekly: "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.”

Jonathan Harrison of the Association of Cycle Traders said that reintroducing a cap undermined the scheme: "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 'reform' that Harrison alludes to and would prefer would be to address the fact that some schemes are able to cream off large proportions of retailer profits – up to 15% of the value of the bike in some cases. This makes them a double edged sword – meaning more sales but at far lower margins for retailers – and is something Cycling Weekly has written about on numerous occasions previously.

As Parsons points out, the current schemes don't offer any benefit those on the lowest salaries who may pay little to no tax – the very people who would probably benefit the most.