Company Motorbike
Discussion
I'm sure Eric will be along shortly to clarify but I currently have an Yam R1 as a company motorcycle and have run 2 bikes prior to that as a company motorcycle.
I have claimed 100% of the input VAT on the purchase of the bike, but I must charge VAT when I eventually sell it. All servicing, running costs and safety equipment are put through the books. Just to note: Helmets are VAT exempt.
The bit that you have to bear in mind is that a motorcycle DOES attract a Benefit In Kind liability. The Revenue ask you to apportion business versus personal use. So if the running costs for a year are a £1000 and you say it's split 50/50 business versus personal use then you will have a £500 BiK liability. My accountants advice was not to take the piss on the apportionment and go for something reasonable.
I have claimed 100% of the input VAT on the purchase of the bike, but I must charge VAT when I eventually sell it. All servicing, running costs and safety equipment are put through the books. Just to note: Helmets are VAT exempt.
The bit that you have to bear in mind is that a motorcycle DOES attract a Benefit In Kind liability. The Revenue ask you to apportion business versus personal use. So if the running costs for a year are a £1000 and you say it's split 50/50 business versus personal use then you will have a £500 BiK liability. My accountants advice was not to take the piss on the apportionment and go for something reasonable.
The Depreciation Rate can be any rate you (or the accountant) thinks fit. The Revenue aren't concerned about Depreciation as they don't allow it as a business cost.
What is more important is the Capital Allowance (CA)claim. Unlike Motor Cars, the CA claim on a motor cycle is not restricted to an annual maximum of £3,000. Also, Motor Cycles should also be eligible for the 50% First Year Allowance. The usual annual CA claim will be 25% on the Written Down Value.
For sole traders and partnerships, any private useage of the motor cycle should be reflected in an appropraite restriction on the CA claim and the expenses put through the business.
In limited companies, the Private Use restriction is not carried out as it is for Sole Traders/Partnetships. Instead, a Benefit in Kind income tax and National Insurance charge will be processed through the PAYE system.
VAT claims on running costs should be restricted for private useage for both sole traders/partnerships AND limited companies.
The situation regarding contract hire is quite tricky as the tax and accounting treatment differs dramatically if the finance agreement is
a) a finance lease
b) an operating lease
c) a hire purchase agreement
d) a standard bank loan
What's more, the Revenue may be changing the current rules regarding leased assets, so it will probably get even more complicated.
What is more important is the Capital Allowance (CA)claim. Unlike Motor Cars, the CA claim on a motor cycle is not restricted to an annual maximum of £3,000. Also, Motor Cycles should also be eligible for the 50% First Year Allowance. The usual annual CA claim will be 25% on the Written Down Value.
For sole traders and partnerships, any private useage of the motor cycle should be reflected in an appropraite restriction on the CA claim and the expenses put through the business.
In limited companies, the Private Use restriction is not carried out as it is for Sole Traders/Partnetships. Instead, a Benefit in Kind income tax and National Insurance charge will be processed through the PAYE system.
VAT claims on running costs should be restricted for private useage for both sole traders/partnerships AND limited companies.
The situation regarding contract hire is quite tricky as the tax and accounting treatment differs dramatically if the finance agreement is
a) a finance lease
b) an operating lease
c) a hire purchase agreement
d) a standard bank loan
What's more, the Revenue may be changing the current rules regarding leased assets, so it will probably get even more complicated.
Don't forget, BIKs don't just apply to limited companies. They apply to any business which is an "employer" i.e uses staff and runs their slaries through the PAYE system.
There are no specific rules for Motor Cycles. They are included in the "catch all" general provisions for "Company Assets Supplied to Employees", This could include virtually anything, unless it is an asset for which special BIK rules apply.
The general rule is that the BIK is calculated at 20% of the cost of the asset and then the private useage element is applied to that - the resultant figure becomes the annual BIK charge.
Motor Cycle cost - £5,000
20% = £1,000
Private useage = 50%
Annual BIK - £500
In some circumstances, Market Value can be substituted for cost.
>> Edited by Eric Mc on Friday 17th March 10:23
There are no specific rules for Motor Cycles. They are included in the "catch all" general provisions for "Company Assets Supplied to Employees", This could include virtually anything, unless it is an asset for which special BIK rules apply.
The general rule is that the BIK is calculated at 20% of the cost of the asset and then the private useage element is applied to that - the resultant figure becomes the annual BIK charge.
Motor Cycle cost - £5,000
20% = £1,000
Private useage = 50%
Annual BIK - £500
In some circumstances, Market Value can be substituted for cost.
>> Edited by Eric Mc on Friday 17th March 10:23
Thanks very much Eric. I work in the leasing industry and am looking at offering contract hire on motorbikes.
I have also heard you mention that the rules regarding leasing are due to change. Any more info you have on this would be appriciated or perhaps you could point me in the right direction.
I have also heard you mention that the rules regarding leasing are due to change. Any more info you have on this would be appriciated or perhaps you could point me in the right direction.
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