Did you know that you can have your bike as a company vehicle? (LLP, Ltd and sole traders) You pay 20% of the value in benefit in kind, so it works best on older bikes. You can put through insurance, servicing, fuel (advice required here), clothing, lids and those all important extras. My accountant pointed this out a few years back.
I did this for years, but the actual reality is better than the 20% you've quoted. Your actually benefit in kind amount, on which you pay tax at whatever rate you're liable for, is calculated on the amount of time the bike is available to you for personal use. So, if you're a fair weather biker like me ;0) and you only use the bike for personal use say 6 months of the year, on a bike costing for example £10,000, your benefit in kind liability would only be £1,000p.a. (i.e. 50%(for the 6 months) of 20% of the £10,000). If you assume that you can only use the bike for evenings and weekends, as you're working the rest of the time, you could reduce the liability to be say 3/7 of that, so £428.27 p.a. - even at 40% tax rate that equals £171.43 actually paid, so probably less than an annual service (which the company pays anyway). Plus, if you are VAT registered and the bike is new you can reclaim the VAT and don't forget the annual depreciation write off. So, if you have your own qualifying business and can provide the use for business, it is such a cheap way to own and run a bike - simples :0)
Claim back VAT on a non commercial vehicle, I don't think so. Also if you already have a company car, the BIK tax rate is alot higher. Also if it's your business and you get paid as a dividend to avoid most of the national insurance and lower band income tax, getting the company to fund the bike will reduce its profits and therefore your dividend payout. There are two certainties in life, death and taxes.
Benefit in kind is paid at whatever your top rate is, as it comes off your allowance, so agreed. Selling your £10,000 bike to the company (note you've already paid the Tax at whatever rate on the money to buy the bike) - £10,000 back in the bank, then getting the benefit of that bike back for just £500 a year sounds like a bargain to me :biggrin:
Then it's just as well that my accountants know more about the rules & regulations regarding tax matters than you then, isn't is. That said, the rules may be different depending on the status of the company, but for a Ltd company that's the way it works.
It's not quite as simple and easy as it sounds. You are only supposed to reclaim the VAT if the bike is 100% business use which is very unlikely especially if you keep the bike at home and your workplace is elsewhere. Commuting to work does not count as business use.
Well my accountants and the Inland Revenue hasn't seen it that way, as I've run 3 new bikes that way with no questions asked or problems arising. Not wishing to sound rude, but I'm only relating my own experiences and the guidance that I have been given, so I have no wish to argue or debate.
No me neither. But i am an accountant and the sticky point is reclaiming the VAT. You can only do that if you use the bike 100% for business and you are supposed to keep mileage records to prove this. HMRC could ask for these at any time they choose and the bike should ideally be registered in the Company's name.
Our accountants also gave me the same advice - VAT is only reclaimable if the bike is 100% for business use. They also advised against trying the following: Still potentially a good thing to do though - better than taking money out of the company as a dividend in order to buy a bike.
Ok, I'm now firmly in the camp of having only nearly the best accountant. My best accountant now giving advice through plexiglass. Just ask jimmy Carr if he'd recommend his accountant? The point of my post was to raise awareness that perhaps that full termis kit with ecu may be more affordable than you first thought!
I bought a new Monster 620 in 2007, reclaimed the VAT, and depreciated it over the two years that I owned it, and sold it for very little to a mate making a rather large loss on it. It was on the books as advertising and promotion so no tax for BIK. The company name did get a mention in the race programme so I reckon I got my moneys worth.
Mate of mine has a Goldwing as a company vehicle, but his company makes motorcycle accessories, so it's relevant to the business. He has done it for years. all legit.
Isn't benefit in kind calculated on the original cost price when new??? If it was done on purchase price companies would sell and buy and buy back vehicles at periodic intervals to reduce benefit in kind Claim VAT back, an interim benefit because you are going to have to add VAT to the sale price when you sell it
I am an accountant and have my bike in my business along with a few clients who have to. I clarified the situation with my investigation insurers and they confirmed that no you could not reclaim the vat unless it was 100% business use.... Other than that it is a good idea: Business gets 100% relief on the cost of the bike and all other costs. You pay tax at your rate on the private % of 20% of the cost when you bought it (not original list price as that is for cars) plus private % of the running costs. So if you buy a £10k bike and its 50% business use and you spend £2000 a year running it then you pay tax at 20 or 40 or 50% on 50% x ((20% x 10000) + 2000). The Company (if you are doing this through a Company) also has to pay class 1A NI of 13.8% on the above calculated benefit.... In theory the bike should also be in the company name rather than the director......
Ozz, have you sat down and worked out how much (if any) tax it saves you? It strikes me it's very little if you do it the correct way. The BIK charge negates much of a saving of the running costs and when you come to sell the bike you have to add back the sale price to your capital allowances claim anyway. The only way i can see it paying is if the bike is 100% business use.
That's why I had to pay an odd amount in an adjustment for Nic. I never like asking questions of my accountant in case it costs me more money
It saves at the start. But also you have to bear in mind if you are a higher rate taxpayer then the running costs are being borne by the Company rather than out of your personal income which would have been taxed at 40% already..... My trouble is that I change bike too often which really cocks it up!
It strikes me it's more hassle than its worth unless you claim a 100% business use. Bear in mind also that the bike isn't yours but belongs to the Company. Should the Company get into difficulties then the bike would be an asset of the Company that creditors could seize.
I have a spreadsheet that my accountant created for me which compares the scenario of your company owning the bike with you owning the bike. It allows you to alter parameters like bike value, business mileage, running costs etc. I'll upload it here when I have a mo.
