Could Bikes Benefit From No VAT?

5 August 2009, 16:22

If you have been reading the news lately you will know that there is a push to change the pricing on bicycles. But not just any old reduction – this is a push to reduce the amount of VAT that is charged on them. Or hopefully, get rid of it altogether.

It seems that the big motoring and cycling company and supplier Halfords wants to be able to cut the rate of VAT on bicycles to just 5%. This is the reduced rate, and it would make a significant difference to the price of a new bike. At the moment the top rate of 15% is charged. And when the VAT prices go back up again, as they are expected to at the end of the year, they will become more expensive still. So just imagine the difference in costs if VAT were to come down to just 5%.

The idea is that more people – children in particular – would be encouraged to go out and start cycling and getting exercise if bikes were cheaper to buy. While a bicycle is a fairly staple item to have for any child, it isn’t something that all children have. So this push to reduce the price would be a good thing in many ways.

The question is really whether the government will go for it. Apparently there have been meetings with the government to discuss the possibility of getting rid of the high rate of VAT. And on top of this Halfords are now hoping that a campaign will attract the attention of the general public and get them on their side.

There is a good chance that this will have the desired effect. It would be hard to believe that the public would be against such a move to make bicycles cheaper to buy. And there is an increasing drive to make sure our kids are out and about and doing more to get regular exercise.

So the coming weeks and months will be interesting to watch as this campaign takes hold. The company has already stated that bike sales have gone up thanks to the recession. This might sound strange on the face of it but in actual fact it makes good sense. Bicycles are a lot cheaper to use than cars, which is why they are becoming popular! Many people are leaving the car in the driveway – and more would do the same if VAT was knocked down by a full 10% as well.

So if you are thinking about buying a bicycle it might be worth holding on to see what happens next in this head to head between Halfords and the government. If the move goes ahead there is no telling when it would come into effect. But if it did it would certainly help a lot of people with regard to getting their kids out and about.

This could be a major change in the cycling world. Let’s hope it does come to fruition and VAT is indeed reduced. Read this article on the Telegraph website to find out more.