Limited Company purchase of motorcycle

[Clive]

I remember a fairly recent thread about this, but can't locate it

The closest I can get is about Leasing and VAT

My basic calculation so far goes something like this...

Company pays £14,000 cash for bike

As a 40% tax payer and 10% for NI that has "saved me" £7,000

Tax code goes down by 20% of cost i.e. 2,800 which "costs me" £1,120 per year, so forgetting depreciation that's about 6 years of ownership

Looking at depreciation over say 3 years, my head explodes.

I presume Insurance is a company expense. What about gear, helmet etc?

Petrol - as most use will be personal, can you pay for all petrol personally and still claim the 25p per mile for business use?

I'll be contacting my accountant, but has anyone done the sums recently or hopefully got a spreadsheet?

 

[Magwych]

You don't want the Tax Man to read this ....

You are gping to put the bike through your limited company as company vehicle, and you state the use will mostly be personal - i.e. not company related ....

As you have an accountant I would consult him; he knows, or at least should know, how you are running your accounts. If you are thinking of reclaiming the VAT too, they are notoriously much harder to convince about non-personal use of business vehicles ...

 

[Clive]

You are gping to put the bike through your limited company as company vehicle, and you state the use will mostly be personal - i.e. not company related ....

Quite a few years since I last had a limited company which I put several bikes through, but it used to be that you could buy just about anything, as long as personal use was declared on P11D

 

[Davel]

I run a company motorcycle. I commute on it, visit clients on it and of course use it personally too at times.

As I understand it:

Buying a new bike or ex-demo one means that you can recover the VAT, as you can on any clothing helmets, fuel and servicing etc. I also buy my own petrol and keep receipts to show that I have done.

You can put most items through the business, as it is strictly speaking protective clothing etc. The VAT is recoverable too.

As a BIK, it is treated entirely differently to say a car but do talk to your accountant.

I'm no expert so do check....

 

[RickA]

Company Bike.

I run a GSA through the firm.

You are taxed on 20% of the bikes purchase price per annum, so 40% taxpayers pay for example on a 10 grand bike is £800 per year. This is ongoing for the time of company ownership and does not reduce with time and the current value of the bike. Usage of the bike is not a factor (ie personal or business).

ALL operating expenses are part of this 20% Benefit In Kind and can be put through the books and Vat is reclaimable on the lot if you are vat registered. This includes "Safety Eqiupment" required to operate the vehicle, Servicing, Fuel, etc etc.

Tip: Buy the most 'basic' bike and have that invoice for the tax man. All 'extras' can be invoiced separately....

Hope that helps.

Cheers, Rick.

 

[LiquidLAN]

I remember a fairly recent thread about this, but can't locate it

The closest I can get is about Leasing and VAT

My basic calculation so far goes something like this...

Company pays £14,000 cash for bike

As a 40% tax payer and 10% for NI that has "saved me" £7,000

Tax code goes down by 20% of cost i.e. 2,800 which "costs me" £1,120 per year, so forgetting depreciation that's about 6 years of ownership

Looking at depreciation over say 3 years, my head explodes.

I presume Insurance is a company expense. What about gear, helmet etc?

Petrol - as most use will be personal, can you pay for all petrol personally and still claim the 25p per mile for business use?

I'll be contacting my accountant, but has anyone done the sums recently or hopefully got a spreadsheet?

Hi Clive, its all pretty simple - my accountant is seriously black and white and she's rubber stamped it, infact she was seriously enthusiastic about it

ok
Company buys the bike only - I havent claimed the VAT back on this and therefor I dont have to show HMRC any kind of breakdown of usage - plus I dont have to charge VAT when I sell it so thats all simple

Company then buys accessories - anything that is a legitimate business requirement you can claim VAT back on

Company also buys necessary safety equipment - claiming VAT back as required

Company pays for insurance - as the bike is register in both my name and the companies (I'm MD of the company) insurance companies are happy to grant me all the NCD I've aquired over the years

Company pays for servicing costs and 50% of the tyres

I pay all the fuel and the other 50% of the tyres and I do not reclaim anything for business mileage

since I am contributing significately towards the running costs that is balanced against any personal use of the vehicle so everyone is happy

mmmm no-one from the inland revenue here is there?

maybe I should say "a friend of mine..."

I can recommend a good tax accountant if you want a second opinion...

 

[Marjorie Proops]

You need to get some advice Clive. As far as I remember a bike is not classed as a 'car' for the purposes of 'company car tax' (it's 'plant & machinery'). Another thing to consider is that as of 5th April this year there is the new first £50,000 100% depreciation rule - could make a big difference!

 

[snoopy]

I claim 50% costs offset against tax and reclaim VAT on the bike, petrol and all gear.

Bike is my own personal vehicle though.

Ltd company, VAT registered.

 

[Clive]

Thanks for all the replies so far.

As it is my own one man company, I'm trying to decide if it is more cost effective to go the "personal" or "company" route. I'll have to do some more sums factoring in the depreciation etc

 

[Blackal]

I run a company motorcycle. I commute on it, visit clients on it and of course use it personally too at times.

As I understand it:

Buying a new bike or ex-demo one means that you can recover the VAT, as you can on any clothing helmets, fuel and servicing etc. I also buy my own petrol and keep receipts to show that I have done.

You can put most items through the business, as it is strictly speaking protective clothing etc. The VAT is recoverable too.

As a BIK, it is treated entirely differently to say a car but do talk to your accountant.

I'm no expert so do check....

Sounds about right, unless you are a small business that operates a "Flat Rate Vat" scheme.

In that case you can't claim the vat back - you just use the Inc Vat price as a company expense.

I may have to look into this idea of company-owned bike further..........

Al

 

[Paul Wakefield]

Sounds about right, unless you are a small business that operates a "Flat Rate Vat" scheme.

In that case you can't claim the vat back - you just use the Inc Vat price as a company expense.

I may have to look into this idea of company-owned bike further..........

Al

You can claim the VAT back on the Flat rate scheme as assets over £2k are subject to the standard VAT treatment (ie. you can claim it all back but have to account for VAT on the sale). In effect you save the VAT on the depreciation. The unusual thing about the FRS Scheme is that no VAT has to be accounted for for private use.

 

[G.C.]

A “friend” purchased a second hand bike through his Ltd company.
No VAT claimed back.
All safety equipment insurance etc put through business.
Depreciation is 25% per annum.

 

[Loiq]

There is also a way to buy things for R+D which works in the same way as IT kit is written off after 12months, I had a paper about it cos we lots of development stuff... which sooner or later ends up on TV-bay

Obviously you can't loose it cos you need to explain and good story for having had it and where it's gone. However you could misplace it in the R+D labs for a while...

make sure your accounts is sort of in on it they'll hide it if they want their fees paying...

 

[stonetown]

Hi all,

Just been through this recently with my accountant as I want to run a new 08 GSA through the books. I am a one man Ltd on the VAT flat rate scheme. I can purchase the bike and reclaim the VAT as the asset is worth over £2K, there is a 50% write down in the 1st year and 25% every year following. All clothing, helmets, insurance RFL etc is a business expense. There is a benefit in kind of 20% of new value which is taxed at your personal rate (22% or 40%). Personal use does not apply, however if commuting to the same location stick to the 24 month rule, otherwise fuel is paid by the business direct or claimed as mileage at 9p per mile.

And that was about it. Amazingly generous I thought when compared to running a company car. Let's hope they don't start clamping down on bikes in the future.

Tim.

 

[earthmover]

Hi all,

Just been through this recently with my accountant as I want to run a new 08 GSA through the books. I am a one man Ltd on the VAT flat rate scheme. I can purchase the bike and reclaim the VAT as the asset is worth over £2K, there is a 50% write down in the 1st year and 25% every year following. All clothing, helmets, insurance RFL etc is a business expense. There is a benefit in kind of 20% of new value which is taxed at your personal rate (22% or 40%). Personal use does not apply, however if commuting to the same location stick to the 24 month rule, otherwise fuel is paid by the business direct or claimed as mileage at 9p per mile.

And that was about it. Amazingly generous I thought when compared to running a company car. Let's hope they don't start clamping down on bikes in the future.

Tim.

Wat he said!
(with the exception of the 24 month rule, which I don't understand )
Mark

 

[Clive]

Wat he said!
(with the exception of the 24 month rule, which I don't understand )
Mark

After travelling to the same location for 2 years, you are then treated as a "permanent" employee i.e. you can't claim any business travel expenses/petrol etc

 

[Yoda]

Clive - have you looked into whether Leasing suits your business or not? I've got mine on a 3 year leasing deal. This keeps capital in the company and takes things off the balance sheet and puts it into operating expenditure.

Full leasing cost is an allowable expense and (for simplicity) I claim just 50% of the VAT.

 

[Clive]

Clive - have you looked into whether Leasing suits your business or not? I've got mine on a 3 year leasing deal. This keeps capital in the company and takes things off the balance sheet and puts it into operating expenditure.

Probably not suitable for me, but I'll check out the detail. I'm a single person company, not quite sure of purpose of leaving cash in the company - to take out (say) £14,000 as a dividend to pay for a new bike, means I'll have to pay nearly £10,000 in tax
I'm sure it's more cost effective for the company to pay for it, just trying to work out by how much; for my own curiosity more than anything

 

[karlp]

Probably not suitable for me, but I'll check out the detail. I'm a single person company, not quite sure of purpose of leaving cash in the company - to take out (say) £14,000 as a dividend to pay for a new bike, means I'll have to pay nearly £10,000 in tax
I'm sure it's more cost effective for the company to pay for it, just trying to work out by how much; for my own curiosity more than anything

40% of £14,000 = £5600

Not sure how you are setup but it is possible to take 14,000 and pay only 19% personal tax.

pm me and i will explain off line.

karl

 

[Clive]

40% of £14,000 = £5600

Yeahbut, 60% of £24,000 = £14,400