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

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."