New report by British Cycling suggests tax incentives for employees and businesses, to encourage bike commuting.

People should receive £250 a year in tax breaks if they cycle to work, according to a proposal to improve public health and business productivity backed by some of the UK’s biggest companies and Olympians.

According to a report published by British Cycling, as well as individual cyclists claiming a tax break, businesses should be able to claim back in tax up to £100,000 in construction works such as bike parking, showers or other cyclist facilities.

The study, written by tax barrister Jolyon Maugham QC, was produced for British Cycling’s Choose Cycling network of businesses, whose supporters include Tesco, GSK, Santander and Coca-Cola.

The campaign has received support from Paralympic cyclist Dame Sarah Storey, who commented “Britain’s businesses have woken up to the benefits that cycling can bring to their employees and it’s about time that the government followed suit.

“It’s only right that if a company invests heavily in providing high quality changing and bike storage facilities – things that will help our nation become healthier and fitter – that they should get a tax incentive for it.”

Under the proposal, employees who mostly cycle to work for a period of at least 10 months a year (monitored by a downloadable phone app), would be able to claim a £250 tax rebate.

The report estimates the plan would initially cost the Treasury about £120m a year.

Companies which install bike parking or other facilities would be able to claim 100% of the costs of up to £100,000 in the first year they were built. This expenditure was calculated to about £50m a year.

Chris Boardman, the Olympic and Tour de France cyclist who is now British Cycling’s policy adviser, said measures to get more people on bikes would more than pay for themselves. “If more people cycled to work regularly, the government would save millions on squeezed NHS budgets and our roads would be much less congested.

“That in itself would more than pay for a £250 tax break and would provide a real incentive for people to live more active lives.”