Company Motorbike
Discussion
chatting over on the biker forum someone raised they thought of a company bike, and this is what they cam up with is it correct as it looks attractive.
BIK = 20% of the purchase price so in the case of the bike I fancy thats 20% of 5500 so 1100 quid off my allowance so either 220 quid a year at 20% or 440 at 40% tax
plus 12.8% or 140.80 in NI per year.
but then all running costs and clothing can be put through as company expenses plus if the bike is bought new from a dealer vat can be reclaimed on the purchase,
and also all expenses are vat recoverable...
now that sounds too good to be true, so am i right or wrong
cheers
Graham
BIK = 20% of the purchase price so in the case of the bike I fancy thats 20% of 5500 so 1100 quid off my allowance so either 220 quid a year at 20% or 440 at 40% tax
plus 12.8% or 140.80 in NI per year.
but then all running costs and clothing can be put through as company expenses plus if the bike is bought new from a dealer vat can be reclaimed on the purchase,
and also all expenses are vat recoverable...
now that sounds too good to be true, so am i right or wrong
cheers
Graham
All expenses are NOT VAT recoverable - only those relating to the business. So, you would have to come up with some method of working out in a fair and resonable way how to split the running costs of the bike between business and non-business and reclaim the relevant Imnput VAT accordingly.
From 6 April, small businesses can claim 100% Cpaital Allowances on annual capital expenditure of less than £50,000. Cars are specifically excluded from this but I doubt if motor cycles are (I could be wrong). Might be worth checking out.
Again, some sort of split in the claim between business and private useage should be made so that the allowance relating to the business element is all that is offset for tax purposes.
I am assuming you are Self Employed.
From 6 April, small businesses can claim 100% Cpaital Allowances on annual capital expenditure of less than £50,000. Cars are specifically excluded from this but I doubt if motor cycles are (I could be wrong). Might be worth checking out.
Again, some sort of split in the claim between business and private useage should be made so that the allowance relating to the business element is all that is offset for tax purposes.
I am assuming you are Self Employed.
Edited by Eric Mc on Wednesday 2nd April 16:43
OK - that does change the picture.
The taxable benefit in kind on the employee will be 20% of the capital cost of the bike as stated.
The company can claim 100% of the acquisition cost of the bike as a one off capital allowance if purchased after 1 April 2008.
VAT can be reclaimed IN FULL on the capital cost and the running costs.
The taxable benefit in kind on the employee will be 20% of the capital cost of the bike as stated.
The company can claim 100% of the acquisition cost of the bike as a one off capital allowance if purchased after 1 April 2008.
VAT can be reclaimed IN FULL on the capital cost and the running costs.
I already do this so whilst I am not an accountant, my accountant is and I've done this for the last 8 years. This is for a limited company YMMV 
Remember that you will have to add VAT onto the sale price when the time comes. But yep its a very tax-efficent way of owning a motorcycle.
[edited as I made a daft assumption about NI -
I believe that no NI is payable if you do the classic contractor thing of very low PAYE plus dividends as NI on a BiK is only payable when on PAYE of over £8,500 (cars and vans are excluded from this, but motorcycles appear to be fine)]
Graham said:
BIK = 20% of the purchase price so in the case of the bike I fancy thats 20% of 5500 so 1100 quid off my allowance so either 220 quid a year at 20% or 440 at 40% tax
The BiK percentage is supposed to be split by the amount of business versus private mileage you do. If you're a bike courier then you could have a BiK of 1%, most folks are reasonable and choose a number around 20% as suggested.Graham said:
but then all running costs and clothing can be put through as company expenses plus if the bike is bought new from a dealer vat can be reclaimed on the purchase,
and also all expenses are vat recoverable...
Be careful with clothing and helmet. Firstly they are safety equipment and zero rated for VAT. Secondly they are quite difficult to pass the "wholly and exclusively for use by the business" bit which means you will end up with a BiK charge. Again this will be at the same % as the bikes purchase cost. This may seem reasonable but you will pay (lets say) 20% of the cost each year irrespective of what they are now actually worth.and also all expenses are vat recoverable...
Remember that you will have to add VAT onto the sale price when the time comes. But yep its a very tax-efficent way of owning a motorcycle.
[edited as I made a daft assumption about NI -
I believe that no NI is payable if you do the classic contractor thing of very low PAYE plus dividends as NI on a BiK is only payable when on PAYE of over £8,500 (cars and vans are excluded from this, but motorcycles appear to be fine)]
Edited by apguy on Wednesday 2nd April 17:50
Edited by apguy on Wednesday 2nd April 17:53
Graham said:
I suppose putting the costs of me getting the licence ( instruction / bike hire / tests etc) would be taking the pee or do you think that would be valid..
I am actually planning to use the bike for work...
G
If you can justify why you NEED a bike rather than car/walk/public transport and why your employer has to train you, rather than replace you then it might work. I am actually planning to use the bike for work...
G
Have 3 motor bikes one is solely for business and use by my company. Also I have 2 company mountain bikes as well. I also put clay pigeon shooting through as I advertise my business on the back of my shooting jacket. Been doing this for 10 years AND had a full revenue audit and owed nothing.
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