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E-Bikes And Other £1,000+ Bicycles Added To U.K. Government's Money-Saving 'Cycle To Work' Scheme

Bicycles costing over £1,000–including e-bikes–will now be officially eligible for the U.K. Government’s Cycle to Work program. This 20-year-old money-saving salary-sacrifice scheme was previously capped at £1,000 unless companies offering the benefit to their employees used their own Financial Conduct Authority (FCA) Authorisation. Alternatively, certain third party Cycle to Work scheme providers have been able to provide £1,000+ bicycles to client company employees, although the current guidance explaining the rules has been unclear to date.  The “refreshed” rules–announced by the Department for Transport on Sunday, June 9–remove the cap and remove some of the ambiguities, too.

Cycling Minister Michael Ellis said:

Making sure that bikes are easily available is crucial to helping more people make the switch to greener modes of transport. Our refreshed guidance provides many incentives to help people do this.”

The Cycle to Work salary-sacrifice scheme was introduced in 1999, aimed at encouraging employees to buy bicycles for commuting. However, the £1,000-cap meant most e-bikes were ineligible for the scheme unless employers applied for their own credit exemption status.

The scheme allows employees to benefit from a long term loan of bikes and commuting equipment such as lights, locks and panniers, tax-free. Only pay-as-you-earn (PAYE) employees are eligible for the scheme, meaning self-employed people have not been able to apply.

The typical saving for an average PAYE tax-payer was originally between 38-45% although this has been reduced over the years by clawbacks from tax authorities.

Employers loan bicycles to their staff as a tax-free benefit on the condition that the bicycles are mainly used to get to and from work or for work-related purposes. The employee “buys” the bike at the end of the load period for a nominal sum.

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