Share this content

Company Motorcycle Tax Liability

Company Motorcycle Tax Liability

Didn't find your answer?

Hi All

I am currently a Director of a Buildign Surveying firm  in the UK and am debating purchasing a motorbike for business and personal use.

I have been informed that the clasification of a motorbike in respect of company tax clasification has changed.

I am unsure whether to purchase the bike myself or purchase it through the company.  Can anyone clarify what the current tax liabilities are for me if I purchase it through my business? I would be classed in the top tax bracket.

If for example i spend £12000 on a bike and say the running costs anually are say £3000 all in for insurance, tyres, petrol etc how much tax would I be liable for?

How would any personal use be accounted for?

Many thanks

Jason

Replies (12)

Please login or register to join the discussion.

avatar
By Anonymous
28th Apr 2010 21:58

Used to be a car for CAs purposes

The change you're referring to relates to the capital allowances treatment.  Motorbikes used to be treated like cars, so didn't qualify for the annual investment allowance (AIA) and writing down allowances were restricted to £3,000.

Now, assuming it wasn't fully utilised elsewhere, the cost of the bike would qualify for AIA, so there's potentially a 100% deduction for the company in year 1, as well as for the annual running costs and any financing costs.

The benefit is calculated as 20% of the market value when first provided (broadly the £12k cost) so the full amount of that benefit would be £2,400.  The company would pay Class 1A NIC on that amount at 12.8% (increasing to 13.8%), which would then be eligible for CT relief.

With a proportion of business use, you would only suffer tax on the personal element. Assuming, say 60%, personal use, you would be taxed on £1,440 (£2,400 x 60%).  So your tax on that at 50% would be £720.

Alternatively, you can fund the purchase and running costs yourself and claim for the business mileage at 24p per mile.

NB.  The company could recover the VAT on the bike if there were 100% business use.  For the running costs, you have the choice of either not claiming the VAT, or keeping detailed records, recovering all the input tax and accounting for output tax in respect of the private use.

oxontax

Thanks (0)
avatar
By Rammstein
29th Apr 2010 08:12

Good answer

Oxontax,

Good answer but I was under the impression that as there is private use, the annual running costs are added to the cost of the bike when calculating the 20% charge.  This would result in £15,000 x 20% less business use to give the BIK figure.

 

Thanks (0)
avatar
By DMGbus
29th Apr 2010 08:52

What are the mileage figures please?

To compare with the tax effects of owning the motorcycle privately (and then the company reimbursing a tax free mileage rate for recorded business miles)  it is necessary to have  mileage data as follows:-

Total business miles per annum for the motorcycleTotal overall (business + private) miles per annum for the motorcycle

 

 

 

Thanks (0)
avatar
By Anonymous
29th Apr 2010 11:03

Quite right Rammstein

I've overlooked adding the private proportion of the running costs to the benefit.  So with the asset benefit of £1,440 and annual costs of £3,000 (still assuming 60% private use), the total benefit would be £3,240 (£1,440 + £1,800).

Class 1As would, I think, be payable on the full £2,400 (the 20% asset charge), as it is a mixed use asset, plus just the £1,800 "additional expense" in respect of private use.

oxontax

Thanks (0)
avatar
By Rammstein
29th Apr 2010 15:08

Yesterday

Oxontax,

I only knew that because I looked it up for a client yesterday.  I know this is not my client but he was looking to buy a motorbike for £12,000 as well!

Thanks (0)
avatar
By nogammonsinanundoubledgame
29th Apr 2010 19:18

Was it an oversight?

If it was deliberate, I would be interested to know what political motivation was behind the separation of motorbike from cars in the latest CA upheaval (if anyone knows, that is).

With kind regards

Clint Westwood

Thanks (0)
avatar
By Anonymous
29th Apr 2010 21:43

No published emissions figures for motorbikes

was the reason cited in a previous thread.

Thanks (0)
avatar
By whopkinscom
26th Jul 2010 17:45

This doesn't seem allowed according to HMRC's 480.pdf

To lift an extract out of

480(2010) Expenses and benefits

http://www.hmrc.gov.uk/guidance/480.pdf

"Since 2002-03, employees and office holders have not been able to obtain capital allowances for a car, motorcycle or cycle."

So I'm confused!

 

Will Hopkins

Thanks (0)
avatar
By whopkinscom
26th Jul 2010 20:35

Cool - My prospective purchase is still on then :)

Thanks (0)
avatar
By Peteruc
26th Jan 2015 15:37

what happened?

Jason or Will,

Did you go through with the bike purchase back in 2010?  Did it work out as planned?

I am looking at doing the same but currently struggling to see if the percentage of BIK can be altered by the amount of private use.  I am currently been told that BIK is fixed regardless of percentage use.  If I am only using the bike for 10% of the time will I still be liable for the full BIK or just 10% of it?

Pete

Thanks (0)
avatar
By whopkinscom
21st Apr 2015 11:06

Company is running two bikes
Hi Pete,

Just noticed your post going through the web trying to workout how to apportion private use.

You'll be taxed as a bik on the portion of business use but have to pay NIC on the whole lot, as there is no apportionment for them - unless you repay the private use (hence my search, as last year this cost me a bit). Most "pundits" seem to take the logical approach of mileages but then there's the whole "made available for use irrespective of whether actually used" bit from HMRC for which I have used days available, I.e not being used for business travel means a private day even if not ridden!

Anyone have an opinion on the two approaches?

Thanks

Will

Thanks (0)
avatar
By the ins and outs
01st Jun 2015 11:48

Just a thought

If use of motorbike is say 80:20 business to private

Claim VAT through company

Have full Capital Allowance

Most expenses through company so get VAT back on fuel, servicing, spare parts etc (exception being parking and tolls and fines arising from private use).

Keep a log and pay 24p per mile of private use back to company

In other words the mirror image of owning bike privately and being paid 24p/mile for business use.

 

Thanks (0)
Share this content