Buying a motorcycle through Limited Company

[halfabusa]

Has anyone here bought a bike / scooter through their own limited company? A colleague at work told me that you can get the VAT off when you buy it through your own company for business use, including VAT off on equipment, insurance, etc.

[mottza]

You certainly need to be vat registered.

[halfabusa]

indeed. do you know some more details about this? i have a few questions...

[horobags]

the way this goverment keep changing goalposts, the safe bet is to check with your accountant.

[bornagainbiker]

Motorcycles \ scooters are classed the same as cars when purchased by companies for business use and the Vat can be recovered by Vat registered companies.

If a motorbike is provided to an employee by his/her employer, and is availiable for private use, the employee is taxed on 20% of the market value of the bike when it was first used. So if you are given a bike by your employers for business and private use for a year, which is worth £6,000 (Full Manufacturer RRP applies) when you get it, you will be taxed as if you had additional salary of £1,200 (20%). Benefit in Kind (BiK) applies at the current rates, your tax code will be reduced and the yearly P11D completed.

If the vehicle is not used for private use and is purely a business 'pool' vehicle, a log must be kept and it can not be used for any private use. A business pool car can not be taken home but a pool van can and parked up at the employees home. We have this situation at work (I'm the company accounts manager) and it was clarified by our last PAYE tax inspection 2 months ago. I am not sure what category a motorcycle would be classed though, a car or van.

I have a friend who purchased his £10k Suzuki Intruder M1800R through his business (he is a director), claimed the vat back and pays the normal BiK tax. All associated fuel and costs are paid by the company as a business expense and all vat reclaimed. This would be no different for an employee except their tax code would be reduced and tax taken through their PAYE. The company then also pays additional Class 1A NIC on the P11D and a Fuel Scale Charge on the output vat to account for private fuel use.

Here is a link to an HMRC document that may help. http://www.hmrc.gov.uk/guidance/2011/480.pdf

Any final tax advice should be sought from your accountant.

[johnp]

Now that has given me an idea about buying my next bike.

[chrisp]

I asked my accountant and he came back with this:

Benefit in Kind tax will apply and is calculated at 20% of the cost of the asset including motorbike costs.
Example:
Motor Cycle cost = £10,000
Benefit in Kind 20% = £2,000
Please note that any costs incurred related to the motorbike, i.e. fuel, insurance etc. would be classed as a benefit in kind and taxed at 20% as well.
Also, class 1 A taxes of 13.8% of the benefit in kind would also be payable each year.
If you're on the flat-rate scheme, the VAT will be reclaimable on the purchase of an asset above £2,000.

I read that as not worth bothering.