Government taxation think-tank backs Cycle to Work Scheme ahead of Budget

Independent body set up by government last year says keep scheme, but biking breakfasts may go

by Simon_MacMichael   March 7, 2011  

London cyclist approaching junction.jpg

The Office of Tax Simplification has recommended to Chancellor of the Exchequer George Osborne that the Cycle to Work scheme be retained due to the benefits it brings in encourage people to take up cycling and lead healthier lifestyles.

The Chancellor is expected to make a final decision on the scheme’s future in the forthcoming Budget, due to be presented to Parliament on 23 March.

The Office, which although an independent body has its offices in the Treasury in Whitehall, was set up last July to give the government advice on taxation matters.

In a foreword to its Final Report following a Review of Tax Relief published last week,  chairman the Rt Hon Michael Jack, former Tory MP for Fylde, proclaimed: “‘To boldly go where no man has gone before’ was the proud boast of the crew of Star Trek’s USS Enterprise. I think that this phrase must have been in the Chancellor’s mind when, last July, he set us off on our voyage of discovery into the world of tax reliefs and allowances.”

Exciting as that sounds – and we dare say Mr Spock would have brought his formidable powers of Vulcan logic to bear on the issues concerned – to the average person, the important point is of course how their pay packet will be affected, and for anyone concerned with the Cycle to Work scheme, introduced in 1999, the recommendation to retain it must be seen as an encouraging one.

In its report, the Office considered the question of, “Is the policy rationale still valid, does the relief achieve it and what might be the impact of repeal?”

Citing data published last month by the Cycle to Work Alliance, previously reported here on road.cc, that 76% of cycle to work scheme users maintained that they wouldn’t have bought a bike had they not been offered one under the scheme, and 87% said their health had improved as a result of it, the Office has recommended that it be kept.

“The original policy remains valid, there is little administration on behalf of the employers or employees and the scheme is well used. We recommend that this relief be retained,” it said, adding: “In view of the advent of the bike hire scheme introduced recently in London, it would be logical to extend the relief to cover support given by employers to employees who use those cycles,” – in other words, it believes you should be able to claim tax relief on work-related use of the Barclays Cycle Hire Scheme.

Keith Scott, Cycle to Work Alliance Representative and Head of Business Services at Halfords welcomed news of the recommendation to keep the Cycle to Work scheme, saying: “We are delighted the Office of Tax Simplification has recognised the important work the cycle to work scheme plays in supporting the Government’s health, environment and sustainable transport policy.”

Gary Cooper, director of Cyclescheme which is also a member of the Cycle to Work Alliance, added: “The Office of Tax Simplification’s review confirms the popularity of the Cycle to Work scheme and its effectiveness in achieving the Government’s core objectives. Cyclescheme is proud to be supporting a growing culture of cycle commuting that benefits employees at all levels, has a positive environmental and public health impact, and supports Independent Bicycle Dealers (IBDs) and the local communities they serve. This is great news for the longevity of the scheme.”

It’s not all good news though – the Office believes that relief on income tax and National Insurance contributions for Cycle to Work breakfasts, provided by some employers often as a tie-in with National Bike Week, should be abolished, saying: “This relief is available to all businesses in the UK, but the actual take up is unknown. We have received a number of representations that take up of this relief is very low. In addition, given the value of each breakfast, the total tax savings from this relief will be negligible.”

As a minor perk that encourages people to cycle to their workplace and puts a smile on their faces while filling their stomachs, we can't be alone in believing that in this case the recommendation to axe it is, as it were, "illogical."

 

 

 

6 user comments

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Cycle to Work breakfasts Confused

what are they then? any links?

STATO's picture

posted by STATO [400 posts]
7th March 2011 - 16:11

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They have them at my grandchildrens primary school, turn up on bikes with kids a bit earlier and croissants and coffee etc are on the go for free. I have never been but wife and daughter have.

onward ever onward

bikecellar's picture

posted by bikecellar [221 posts]
9th March 2011 - 1:48

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Whilst working for halfords sold many hundreds of bikes on cycle to work scheme, perhaps one percent will ever be used for cycling to work, purchasers usually quite well off looking for a saving on new bike, it's really a middle class tax break dressed up. As I understand it most of the guys working for halfords selling these bike's (if they are on min wage) will not themselves qualify for C2W something to do with employer oftakes from stat min pay. I was made redundant last May halfords did away with specialists on more than SMP. Now retired and loving it.

onward ever onward

bikecellar's picture

posted by bikecellar [221 posts]
9th March 2011 - 2:02

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@bikecellar, it may look to you like a middle class tax break but it's not true to say that's all it is.

The fact that it is used by those on higher wages is probably because they have the knowledge, connections and initiative to persuade their HR departments to take up the scheme. Lots of larger employers refuse, claiming the additional paperwork involved is too much for them, a handy excuse.

Are you saying everyone at Halfords is on minimum wage and therefore unable to make use of their C2W scheme? Or is it just a dig at your former employer?

bikecellar wrote:
turn up on bikes with kids a bit earlier and croissants and coffee etc are on the go for free.

Count me in! Cycle to work breakfasts would certainly get my kids to school. They love croissants, though they're still a bit young for the delights of decent filter coffee.

I remember a mention of cyclists being offered hot drinks on their way to work one winter. I thought that was lovely, like a little treat for making the effort to commute by bike...

A quick google found it:
http://www.copenhagenize.com/2010/02/cyclists-rewarded-with-hot-cocoa-in...
Smile

Simon E's picture

posted by Simon E [1780 posts]
9th March 2011 - 11:23

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Well I'm definitely what the old school would call "middle class" and I did get a bike thru C2W - but I use it for a 25 mile round commute every day (barring extreme weather ofc) and there's no way I could have afforded such a good bike otherwise.

Frankly I think the scheme is great idea, even if it does seem to get more of the "middle classes" on bikes - these are often the people politicians are aiming policy at and that can't be a bad thing.

Sorry @bikecellar - but it does sound a little like sour grapes.

posted by mad_scot_rider [518 posts]
9th March 2011 - 12:53

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mad_scot_rider wrote:
Frankly I think the scheme is great idea, even if it does seem to get more of the "middle classes" on bikes - these are often the people politicians are aiming policy at and that can't be a bad thing.

And even if the scheme is disproportinately taken up by those with a bit more money that doesn't mean no-one else benefits. It has got one of my colleagues (definitely not middle-class) into cycling - he rides to work, has joined the local club, does TTs etc.

Quote:
87% said their health had improved as a result of it

This is not unimportant. Even if those people ride at the weekend rather than daily to work it still benefits them and means fewer cars on the roads while they may well influence colleagues or friends and relatives to consider riding.

In the longer term there are going to be more good (sometimes little used) secondhand bikes on the market for everyone. It also means bike shops get more sales and more service/repair work.

Simon E's picture

posted by Simon E [1780 posts]
9th March 2011 - 13:43

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