Company motorcycle implications

[Shipley]

My company motorbike is coming towards the end of its two year warranty. Rather than tying up capital on its replacement, we're looking at contract hire (or other VAT'able funding mechanism).

Some advice appreciated on:-

1) How much of the "rental" is an allowable expense?
2) Is all the VAT reclaimable?
3) What's the P11D value? For the current bike we assess on 20% of the price paid for the vehicle. That become tricky when there hasn't been a price paid for the vehicle..!!?

Thanks in advance.

[Sofia1]

Why not buy the motorcycle - that way you get the VAT back and, if a small business, 50% capital allowances in year 1. The benefit in kind is based on 20% of the purchase price then your prevailing tax rate. So, lets say it is a Triumph T100 at circa £6000 - 20% = £1200 - and if taxed at 22% the annual benefit is £264. But this can be reduced if there is business mileage, which you have to elect and hope the Revenue accept. If 50% business mileage, then the benefit is only £132. What more reason would you want to avoid leasing??!! I have been through this with a scooter and had to do all the research as accountants are not clued up on this, and because I work from home, am claiming 100% business mileage. The bike costs me virtually nothing. Who needs company cars?

[Sofia1]

I should add that you might also consider recharing/claiming for motorcycle gear (note, helmets are not subject to VAT), servicing, insurance and - in my case - training / refresher training. Leasing companies will not provide any of these benefits!

[montyuk]

I am now working from home through my limited company. My wife uses our private car to go to work, so I am without transport. I am looking at getting a scooter / motorbike so I can get to the post office / banks / Suppliers etc in connection with my business.

From what I read here, and elsewhere, it seems that the cost of the scooter would be treated as an asset which my conpany can claim capital allowaces on. Am I right in thinking that if the scooter is only used for business, there is no P11D BIK? And if I decide to use it for private use, and then I need to apportion the use and calculate the B.I.K?

Currently I can only see me using it for business. If I get one I would be looking to get a full motorcycle licence. Would the cost of lessons / test be an allowable expense, and would it be a PIID benefit to me? In theory I could get away with riding with a provisional licence, however as I have never ridden before, I would want to get some lessons.

Any advice appreciated

[Sofia1]

I worked from home therefore deduced that all trips were on business and.......bought a scooter and then a motorcycle. Am now on the third motorcycle and second scooter, having reclaimed VAT on all (have traded in two). Even better as of this April 6th - the full 100% cost of the bike can be offset in the first year of ownership against capital allowances - assuming you will take advantage of the £50k first year allowances scheme. Thanks to Robob on this site who I think pointed this out. I have not paid PAYE on the basis that these bikes are wholly used for business. Re offsetting training - I doubt it - unless you are running a courier company! But your accountant should advise.

[courty61]

Hi all - saw this old thread which relates to a query we've got now from a client.

He uses a motorbike owned by his company for 100% Business. Now the original post suggests that there is no taxable benefit, no tax or NIC.

BUT, according to ITEPA 2003 s.316

316(1) No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of the provision for an employee of accommodation, supplies or services used by the employee in performing duties of the employment if conditions A and B are met.

316(2) Condition A is that any use of the accommodation, supplies or services for private purposes by the employee or members of the employee's family or household is not significant.

316(3) For this purpose, use “for private purposes” means–

(a)use that is not use in performing the duties of the employee's employment, and

(b)use that is at the same time both use in performing the duties of an employee's employment and other use.

316(4) Condition B is that where the provision is otherwise than on premises occupied by the person making it–

(a)its sole purpose is to enable the employee to perform the duties of the employee's employment, and

(b)what is provided is not an excluded benefit.

316(5) The following are excluded benefits unless regulations under subsection (6) provide otherwise–

(a)a motor vehicle, boat or aircraft, and

(b)a benefit that involves–

(i)the extension, conversion or alteration of living accommodation, or

(ii)the construction, extension, conversion or alteration of a building or other structure on land adjacent to and enjoyed with such accommodation.

316(6) The Treasury may make provision by regulations as to what is an excluded benefit for the purposes of subsection (4)(b).

316(7) The regulations may provide that a benefit is an excluded benefit only if such conditions as may be prescribed are met as to the terms on which, and persons to whom, it is provided.

Now does a motorbike come under 'motor vehicle' for these purposes?? Or is there still no benefit?

[RAL]

No, motor bike is not motor vehicle.

You claiming that 100% business uses.
1. Where do they keep the motor bike over night?
2. Are employees not allowed for private usage? (Clearly mentioned in either employment contract or staff handbook)
3. Do they keep log of all the mileage?

If en employee takes motorbike home than there may be some benefit in kind.

[misterb]

Hi Ral,

I'm just starting to look at this. The company I work for are offering to buy my next motorbike.

The bike will be kept at my home overnight, but will only be used for commuting to our main place of work, a warehouse, but also to various locations where we also work, assorted TV Studios.

WIll there be BIK on this?

I'm assuming it's best to purchase it as apposed to lease it?

If they were to sell it a year later, how would that affect the company and me?

I really appreciate any help you can give.

[Incredulum]

Commuting does not count as business mileage.