C2W update: Cycle to work appears unscathed in ’25 Budget

Despite rumours and reports that cycle to work (C2W) was going to be receiving a new limit to weed out abuses of the system, the Chancellor did not announce any changes to the scheme in today’s Budget. There’s a chance there will yet be a follow up announcement on C2W in this afternoon’s flurry of press statements and follow up documents from the Treasury, but escaping a statement in the Commons is likely to be indicative of no change to C2W.

That’s probably a relief for many in the trade who saw the reintroduction of a limit (the £1,000 cap was lifted in 2019) as misguided. While there have been long-term concerns in some quarters that some C2W purchases were for expensive bikes ridden at the weekend for leisure – the original report from the FT referenced “high earners… [buying] £4,000 eBikes for weekend rides in the Surrey Hills” – that assumption was roundly challenged, not least by the Cycle to Work Alliance:

“The idea that Cycle to Work is used only to buy high-end bikes simply isn’t backed up by the data. Both government and industry figures show that most purchases are for reasonably priced equipment that enables people to commute in a healthy, low-carbon way,” said Steve Edgell, Chair of the Cycle to Work Alliance (after the new cap reports surfaced earlier this month). “Since the cap was lifted in 2019, average purchase values have risen modestly, largely because of growing demand for e-bikes, e-cargo bikes and adapted cycles. These are more expensive but vital for helping more people make cycling to work a realistic option.

“Any new cap would risk undermining the inclusivity and success of a scheme that helps thousands of workers across the country choose cycling over driving, supporting cleaner air, lower emissions and better health.”

Ruth Cadbury, Transport Committee Chair of the Transport Committee, was among the voices prior to the Budget pressing the Chancellor to fully consider the potential of the impact on a cap on the C2W scheme on both employees’ ability to access eBikes and e-cargo bikes as well as on disabled employees’ ability to access specially-adapted cycles.

It’s likely that C2W reform will continue to stay on the agenda of the industry as many seek to expand eligibility for all workers, including those not enjoying long term contracts.

While C2W was (seemingly) unscathed, the automotive-orientated Motability – the scheme were mobility allowance can be used to lease a brand-new vehicle – did get a comparable revamp where luxury vehicles were removed from the scheme.

Industry reaction and beyond C2W…

Cycling UK unpacked some of the implications of the November budget – or lack of them for the active travel sector.

Sarah McMonagle, Director of External Affairs at Cycling UK, said: “While the picture for walking and cycling investment in today’s Budget is still unclear, it’s reassuring to hear the Chancellor call infrastructure the backbone of economic growth. Cycling and active travel investment comes at little cost to the taxpayer and can be built more quickly than other forms of transport infrastructure.

“If the government is serious about boosting the UK economy, we need greater investment in walking and cycling, putting more power in the hands of local leaders to unlock regional growth and giving us all more freedom to travel. For every £1 spent on cycling and walking schemes in the UK, nearly £6 back in benefits. From better public health to more people shopping on the high-street, investment in cycling and walking carries huge potential to revitalise communities across the country.

“There’s still time to unlock this potential, and we impress upon the government the benefits of a long-term, integrated approach to active travel that better connects and strengthens our communities.”

The Association of Cycle Traders (ACT) referenced relief that C2W dodged a new cap, but also spoke out on rate relief and imports.

“The cycle to work scheme is a lifeline for thousands of workers who want to swap the car for the bike, and for the independent retailers who help them do it,” said Jonathan Harrison, Director of the ACT. “Reimposing a cap would have been a backwards step at exactly the time we need to be encouraging cleaner, healthier travel. We’re relieved the Chancellor has listened to the evidence and left the scheme alone.”

Harrison said a cap would have particularly harmed families needing e-cargo bikes to replace car journeys, older riders relying on e-bikes for longer commutes, and disabled employees requiring specially adapted cycles.

“E-bikes and cargo bikes cost more, but they’re the tools that make cycling practical for people who couldn’t otherwise manage it,” said  Harrison. “A cap would have slammed the door on exactly the people we should be helping.”

The ACT referenced that C2W had many areas of reform ahead including high commission rates charged to retailers, the restrictive commute-to-work element, and access for those on minimum wage.

The ACT also welcomed wider Budget measures affecting independent cycle retailers, including permanent business rates relief for retail, hospitality and leisure properties, though Mr Harrison expressed disappointment at the delayed closure of the low-value import duty loophole.

“Independent bike shops have been hammered by business rates for years while online giants operate from warehouses on a fraction of the cost,” said Harrison. “Permanently lower multipliers for high street retail is exactly the reform we’ve been calling for. However, waiting until 2029 to close the import duty loophole is far too long. The USA closed their loophole in six months and Europe is acting next year. Why should UK bike shops endure another four years of unfair competition from overseas sellers dodging duties and safety standards?”

Andrew Goodacre, CEO of Bira Group, of which ACT is an umbrella organisation, warned that the Budget’s business rates reforms fell short of promises made by government.

“The original proposals talked about reducing multipliers by up to 20p for smaller properties,” said Mr Goodacre. “What we’ve actually got is a 5p reduction. The government has missed a real opportunity to tackle an unfair tax. Despite claims of support, many independent retailers will face bill increases of up to 30% next year. With the National Living Wage rising to £12.71 and another four years before import duty loopholes close, independent retailers are facing a perfect storm of cost pressures.”

An impromptu poll on the Facebook Group Cycling Industry Chat found the majority of respondents (at time of writing) believe there is scope to ‘fine tune’ C2W, while a fair proportion noted ‘no changes to C2W is good news for the industry’.