We speak to voices across the industry to understand the shortcomings of the Cycle to Work scheme, and the blockers that prevent it being broadened
This feature was written for and published by the Global Cycling Network. Read it on the GCN website.
The Cycle to Work scheme has been at the centre of an industry debate for months now, and whilst commission fees are the central issue in the debate, one of the other key issues up for discussion is the accessibility of the scheme or the lack thereof.
The Cycle to Work scheme is only accessible to PAYE (Pay As You Earn) employees who earn more than the minimum wage, which means around a fifth of the working population, and over half of the UK population at large, don’t meet the most basic eligibility criteria.
The Association of Bicycle Traders (ACT), the Cycle to Work Alliance and Cycling UK say this needs to change. Spokespeople for each of these groups have told GCN that the scheme must be more accessible, so low earners and self-employed people can access the discount too. Indeed, the Cycle to Work Alliance, which successfully lobbied for the removal of the £1,000 cap on Cycle to Work scheme purchases, are now lobbying for greater accessibility.
However, two other providers, the Green Commute Initiative (GCI) and GoGeta, say that amid the current political climate, calls for reform are unrealistic. Rather than casting a wider net, we can boost the impact of the Cycle to Work scheme by promoting it among those who have access, and supporting people as they make the transition to cycling to work.
Read more: Everything you need to know about the Cycle to Work scheme
Why is the Cycle to Work scheme not accessible?
The Cycle to Work scheme offers PAYE (Pay As You Earn) employees the chance to buy a bike or cycling equipment on their pre-tax income. Whilst it’s a great scheme for the people who can access it, almost a fifth of the working population are not eligible.
Firstly, the scheme is inaccessible to self-employed people who pay tax as one lump sum rather than on a ‘Pay As You Earn’ basis. As of December 2023, there were 4.37 million self-employed people in the UK — that’s 13% of the British working population.
Secondly, the scheme excludes people who earn on or around the minimum wage, as Katie Legg, Cycling UK’s Commercial Director, highlighted on a call with GCN:
“It’s quite prohibitive for those that are on lower salaries; you need to make sure that you hit that minimum wage threshold after the fee is taken from your salary in order to be eligible for it. So the people that have the best opportunity to make a significant change to their well-being, to their household income, to benefit from the scheme […] are those that will struggle to use the scheme, unfortunately.”
The Low Pay Commission estimates that there are 1.6 million people paid at or below the National Minimum Wage, or around 5% of the overall workforce. That figure does not capture the large number of people who earn slightly more than minimum wage, for whom the scheme would be either unavailable or heavily restricted.
Subsequently, Andrew Goodacre, Director of the ACT, told GCN that the scheme must be reformed to allow for “wider access for employees on NMW.”
Altogether then, at least 18% of the UK’s working population, or around 6 million people, are unable to access the Cycle to Work scheme.
Chris Last, Chair of the Cycle to Work Alliance, told GCN that increasing accessibility is one of the main objectives of the Alliance, which represents the five biggest scheme providers. Last said the Alliance aims to, “break down barriers to the Cycle to Work Scheme, particularly for those on National Minimum Wage and the self-employed.”
Read more: More than 500 bike shops unite against Cycle to Work changes
Is reform a realistic prospect?
Nevertheless, not everyone believes that top-down reform is a realistic option. Joanna Flint from the Green Commute Initiative, a not-for-profit scheme provider, argues that whilst it’s easy to pick holes, it’s worth remembering that, “no government scheme is ever perfect.”
“To make the scheme accessible to wider society, there will need to be changes to quite a few pieces of legislation and with the election and other pressing international issues, we’re not convinced the Cycle to Work Scheme will make it to the top of the agenda,” Flint said.
Similarly, Barry Scott, founder of scheme provider GoGeta, told us in a recent interview that he is worried that calls for reform will backfire:
“I think if the cycle body says, ‘Cycle to Work is broken, let’s fix it’ I just think [the government] will say, ‘Well if this isn’t good enough, you just get nothing.’”
Instead, Flint argues that additional schemes, that could potentially sit alongside Cycle to Work, are the answer, saying, “we need more active travel initiatives to fill the gaps of the Cycle to Work scheme.”
The Green Commute Initiative offers a salary sacrifice scheme for national minimum wage earners, which replicates the structure of the Cycle to Work scheme but uses net pay. This resolves the minimum wage issue and allows employees to spread the cost of a bike over an extended period, without interest and without the financial risk of a ‘Buy-Now-Pay-Later’ scheme like Klarna, but it removes any tax discount.
“Perhaps the employers of the low-paid should be asked to come up with active travel solutions,” suggests Flint.
Read more: Cycle to Work reform must come from within the industry — GoGeta’s founder
Simply getting higher uptake among people who are eligible is a good start
Before we go down the long legislative process of opening up the Cycle to Work scheme to more people, we could do more to make sure that those who already fit the criteria make use of the scheme.
Firstly, there are those of us who are already cyclists, who choose not to use the scheme. Most cyclists fit into this group, as the figures, quoted by GoGeta’s Barry Scott, indicate:
“I think the UK cycling trade is £1.5 billion. Cycle to Work is only £250 million. It should be bigger given the tax savings, it should be bigger. It should be a £500 million business.”
Scott says that the low uptake of the scheme is down to two things: firstly, that people think they need to ride to work on Cycle to Work purchases, when in fact this is not enforced. And secondly, that people perceive the scheme as a pain or inconvenience, largely because of the surprising end-of-hire fees that some providers put at the end of their payment period.
More importantly, there are the millions of people who do not currently cycle, who could use the scheme to get started cycling for the first time. As Katie Legg explains, historically, the scheme has been a successful tool for getting these non-cyclists on bikes:
“From what we know and what we understand, 60% of those who have taken up the scheme so far would otherwise be driving to work.”
Over the past 25 years, 2 million people have taken advantage of the scheme. That figure is something to celebrate, but given that there are currently around 27 million people who fit the criteria for the scheme, there is ample room for growth.
For Legg, the first step for increasing that figure is by communicating the power of the scheme to employers. If they believe in the benefits it will offer them, not just their employees, they are likely to promote the scheme through their organisations.
“If you think about it from the perspective of the employer, it has an impact on their carbon footprint, it will make for happier, healthier employees who have less stress on their way to work. And therefore generally would arrive ready to contribute more meaningfully to their working day.”
“Only once an organisation is really on board with those benefits are they likely to advocate for the scheme to the level that it would need for more individuals to take it on.”
Then, employers should take steps to support employees who want to commute by bike. She suggests that employers “have a real conversation about what the barriers are to cycling, and why an individual might not choose to cycle to work.”
Shower facilities; safe bike storage; a bike pump: if employers want their staff to make use of the Cycle to Work scheme and commute by bike, they need to facilitate cycle commuting.
Meanwhile, Last, from the Cycle to Work Alliance says that infrastructure, safety and bike security are key to getting more people to make use of the scheme, adding, “if you’re a nurse or a doctor and you’re bike’s gone when you come out, that’s absolutely heartbreaking, so security is a big thing for me.”
Read more: I can’t cycle to work, or can I?
Could the Cycle to Work scheme be more accessible?
Anyone who understands the range of benefits that cycling can bring, both on an individual level and a population level, would argue that greater accessibility to the Cycle to Work scheme would be a good thing. When more people travel by bike, the air is cleaner, the roads are less congested, and people are healthier and happier. There’s even evidence to suggest that cycling gives people an ‘orientation towards the common good’. It’s good news, then, that Cycle to Work Alliance has now turned its focus to increasing the accessibility of the scheme.
However, given the amount of time it can take to change pieces of legislation, especially when cycling is far from the top of the political agenda, it seems wise to seek interim measures. As Flint from GCI points out, self-employed people could always write off a bicycle as a business expense. Meanwhile minimum wage employees can access the Green Commute Initiative’s net salary sacrifice scheme. It seems illogical that low-paid employees are the ones that must miss out on the discount, but until the structure of the scheme changes, that might be the best option for employees who want to buy themselves a new bike whilst spreading the cost.
