Company motorbike (one person owned Ltd, no IR35)

[trickywoo]

I know we've done this before and I know the actual rules but I'm interested in what people do in reality.

Ignoring the morals of it, IMO the VAT man would have a hard time proving non-business use for an employee owned Ltd.

Perhaps a topic for another day but I increasingly feel hard done by with all the rules and costs around running a business, if there is a way to get a little back I'm interested.

I suspect it comes down to how comfortable one is with the VAT man knocking on the door.

[poo at Paul's]

Not sure what you mean. But if you mean you are a one man band operating as a Ltd company, and you want to buy a Panigale and pretend you take your joinery gear to site on it, good luck with that! Make sure you order the panier kit too.

I think it’s highly likely you’ll be picked up very quickly, at year end, and even if you blag it, they’ll bum rape you in every other little thing.

You say you feel aggrieved, try being on PAYE and never even seeing over a third of what you earn each month, and paying top wack for absolutely everything, and unable to claim anything back at all! It’s miserable!

[trickywoo]

poo at Paul's said:

Not sure what you mean.

I own and am the only employee of a Ltd. For the limited liability. I have circa 80 clients which varies year to year.

The rules for company bikes are much better than cars. E.g 100% capital write off on purchase price, VAT reclaimable etc.

Even if you do declare personal use and are basic rate tax the BIK would be the personal tax rate on 20% of the purchase cost.

There is no reason a company can’t have a bike in the same way as many have a van.

[black-k1]

I own a one man Ltd company that currently has a single client. My company owns an H2 SX that I have exclusive use of. Assuming the company is profitable then there is not question that your company owning a motorcycle is a financially sensible thing to do if you are happy to use a motorcycle on company business.

Remember, all running and servicing costs, tyres etc. are also company costs as is a full set of safety equipment/kit. (My BKS leathers are a company asset!)

Keeping a log of journeys done on the bike helps clarify what is company use for personal tax purposes and if there are no personal journeys, as shown by the log, then there are no personal tax implications.

When the company wants to sell the bike on then you can buy it from the company (the price must include VAT) at the market value. I normally pay £50 more that the top quote received from 3 dealers for a cash purchase in September! I generally don't get to wash the bike before I get the quotes!


ETA If anyone is claiming for using their own bike for company use remember that the HMRC tax free rate is 24p, not the 45p that is the car rate!
https://www.gov.uk/government/publications/rates-a...

Edited by black-k1 on Saturday 24th September 13:45

[trickywoo]

Is there any difficulty with insurance? I’m thinking about the question I always see about the registered keeper being different from the person covered.

[black-k1]

I insure it personally with company use. I'm the registered keeper.

[trickywoo]

black-k1 said:

I insure it personally with company use. I'm the registered keeper.

Thanks. I hadn’t thought about the registered keeper not having to be the owner.

I like your valuation strategy, ideally with tyres on the legal limit and due a service too

The financial market situation means I’m done with pension contributions at the moment so I can see a new bike in the garage before the next financial year end.

I have clients in Scotland and IOM who are well overdue a visit.

[Tribal Chestnut]

Similar to Ballack-K1 here.

Use mine for visiting client sites - have another bike for ‘fun’.

Though key current client has a few track-dayers, so might need to share some of that financial burden with the tax man, as it will provide a great opportunity for business growth and development.

Bumped into an architect at Donington who has his company name emblazoned down the side of his bike, and another guy in Portimao who has an interiors company and his co. livery on the bike.

Makes me feel all warm and toasty inside when I think of the positive impact my investment will have on the economy.

[Rob 131 Sport]

poo at Paul's said:

Not sure what you mean. But if you mean you are a one man band operating as a Ltd company, and you want to buy a Panigale and pretend you take your joinery gear to site on it, good luck with that! Make sure you order the panier kit too.

I think it’s highly likely you’ll be picked up very quickly, at year end, and even if you blag it, they’ll bum rape you in every other little thing.

You say you feel aggrieved, try being on PAYE and never even seeing over a third of what you earn each month, and paying top wack for absolutely everything, and unable to claim anything back at all! It’s miserable!

If your not happy with your lot, then why don’t you start a business, together with all the Financial Risks that usually involves.

[poo at Paul's]

Rob 131 Sport said:

If your not happy with your lot, then why don’t you start a business, together with all the Financial Risks that usually involves.

Not much such risk as a limited company at all. I work in a sector when sadly such employment vehicles are not entertained in the slightest!!

[OutInTheShed]

black-k1 said:

I own a one man Ltd company that currently has a single client. My company owns an H2 SX that I have exclusive use of. Assuming the company is profitable then there is not question that your company owning a motorcycle is a financially sensible thing to do if you are happy to use a motorcycle on company business.

Remember, all running and servicing costs, tyres etc. are also company costs as is a full set of safety equipment/kit. (My BKS leathers are a company asset!)

Keeping a log of journeys done on the bike helps clarify what is company use for personal tax purposes and if there are no personal journeys, as shown by the log, then there are no personal tax implications.

When the company wants to sell the bike on then you can buy it from the company (the price must include VAT) at the market value. I normally pay £50 more that the top quote received from 3 dealers for a cash purchase in September! I generally don't get to wash the bike before I get the quotes!


ETA If anyone is claiming for using their own bike for company use remember that the HMRC tax free rate is 24p, not the 45p that is the car rate!
https://www.gov.uk/government/publications/rates-a...

Edited by black-k1 on Saturday 24th September 13:45

Have the rules changed regarding travel becoming regarded as 'ordinary commuting' if you go to the same client site regularly for 24 months?

Personally I took the approach of keeping my company as simple as possible, I may have missed a few wheezes, but I knew where I stood and I saved £££ on accountants. Since I've kept the Ducati a long time and I service it myself, the costs are pretty low anyway.
And of course, I didn't buy it new.


Don't forget the cost of spending half a day debating the finer points with your accountant or friendly VAT man.
I've seen tough blokes in tears when clever schemes unravel.

[Pica-Pica]

trickywoo said:

black-k1 said:

I insure it personally with company use. I'm the registered keeper.

Thanks. I hadn’t thought about the registered keeper not having to be the owner.

I like your valuation strategy, ideally with tyres on the legal limit and due a service too

The financial market situation means I’m done with pension contributions at the moment so I can see a new bike in the garage before the next financial year end.

I have clients in Scotland and IOM who are well overdue a visit.

Not sure why you wouldn’t still make pension contributions.

[black-k1]

OutInTheShed said:

Have the rules changed regarding travel becoming regarded as 'ordinary commuting' if you go to the same client site regularly for 24 months?

Personally I took the approach of keeping my company as simple as possible, I may have missed a few wheezes, but I knew where I stood and I saved £££ on accountants. Since I've kept the Ducati a long time and I service it myself, the costs are pretty low anyway.
And of course, I didn't buy it new.


Don't forget the cost of spending half a day debating the finer points with your accountant or friendly VAT man.
I've seen tough blokes in tears when clever schemes unravel.

AFAIK, the rules about where your normal working base is are still the same. 24 months based mostly at one location makes that location your normal base of operations.

The debate with accountant about bikes, for me, took about 20 minutes. I've had one visit by the VAT man (well, lady actually) who wanted to see the bike.

Having a company bike adds very little to the complexity of running a company. I have my own bike for personal use so that keeps things simple. Rather than saying that you have an old bike so costs are low, thus the benefit is low. However, you need to ask yourself if you'd have a new bike, and have it dealer serviced, if you could get a 46.5% across the board price reduction (including kit) as VAT (20%), Corporation tax (19%) and Dividend tax (7.5%) would all have to be paid on money you'd use to buy those things yourself.

Edited by black-k1 on Monday 26th September 14:22

[trickywoo]

Pica-Pica said:

Not sure why you wouldn’t still make pension contributions.

https://www.pistonheads.com/gassing/topic.asp?h=0&f=206&t=1909610&i=3120

[trickywoo]

black-k1 said:

However, you need to ask yourself if you'd have a new bike, and have it dealer serviced, if you could get a 46.5% across the board price reduction (including kit) as VAT (20%), Corporation tax (19%) and Dividend tax (7.5%) would all have to be paid on money you'd use to buy those things yourself.

Nicely put.

Lets not forget HMRC aren't going around deciding that your PC is over specified for the work you are doing and telling you you should have a cheaper one.

A bike is a bike from their POV so whether its a C90 or a Panigale it makes no difference. I genuinely have clients overdue a personal visit which a bike would work very well for. I think the riding I will do for that will mean I won't have either the time or inclination to use it on a personal basis.

I could do without having to evidence that but I'll be fully prepared to just in case.

Edited to add its probably more than that 46.5% because the market value you eventually buy it from the business for is going to be less than you could sell it for privately given that dealers will low ball you and a private individuals offer price won't wash with HMRC.

Edited by trickywoo on Monday 26th September 14:43

Edited by trickywoo on Monday 26th September 14:44

[black-k1]

trickywoo said:

...

Edited to add its probably more than that 46.5% because the market value you eventually buy it from the business for is going to be less than you could sell it for privately given that dealers will low ball you and a private individuals offer price won't wash with HMRC.

You're right but you need to pay VAT on the purchase at the end so it's a little bit "swings and roundabouts". (Although slightly more swings! )

[OutInTheShed]

black-k1 said:

AFAIK, the rules about where your normal working base is are still the same. 24 months based mostly at one location makes that location your normal base of operations.

The debate with accountant about bikes, for me, took about 20 minutes. I've had one visit by the VAT man (well, lady actually) who wanted to see the bike.

Having a company bike adds very little to the complexity of running a company. I have my own bike for personal use so that keeps things simple. Rather than saying that you have an old bike so costs are low, thus the benefit is low. However, you need to ask yourself if you'd have a new bike, and have it dealer serviced, if you could get a 46.5% across the board price reduction (including kit) as VAT (20%), Corporation tax (19%) and Dividend tax (7.5%) would all have to be paid on money you'd use to buy those things yourself.

Edited by black-k1 on Monday 26th September 14:22

I don't think the saving is quite that great, I could leave the div in the company until old age.
The VAT, sure you save on the depreciation, but the servicing of a new bike still costs.

You have to want another bike, just for business use. Maybe if I'd been blown away by some brand new model and had to have it, I'd be looking at the cheapest way to do that, but that never happened. I'd rather commute on the older bike and not be as picky about weather as I would with a new one.

In my case, most of the contracts which encouraged to to ride a bike lasted long enough for the expenses not to be allowable after 18 months, despite not really being a full time contractor by then. Other times, I was thinking no point putting proper money into a company vehicle if the next gig might be in France or Norway.

It's not like the good old days of 60p/mile for a private 3 litre car is it? (and fuel was 48 p a litre then!).

Of course I might have dropped 'company bike' into a few conversations to outrage the odd permie...

[black-k1]

OutInTheShed said:

I don't think the saving is quite that great, I could leave the div in the company until old age.
The VAT, sure you save on the depreciation, but the servicing of a new bike still costs..

Assuming you are comparing buying a new company bike with buying a new bike personally then the figures are right. Unless you are a higher rate tax payer, in which case Dividend tax isn't 7.5% it's 33%, making the saving 72%!!!

OutInTheShed said:

You have to want another bike, just for business use. Maybe if I'd been blown away by some brand new model and had to have it, I'd be looking at the cheapest way to do that, but that never happened. I'd rather commute on the older bike and not be as picky about weather as I would with a new one..

The point I was making is that having such significant savings may well decide you that you do want a brand new bike.

OutInTheShed said:

In my case, most of the contracts which encouraged to to ride a bike lasted long enough for the expenses not to be allowable after 18 months, despite not really being a full time contractor by then. Other times, I was thinking no point putting proper money into a company vehicle if the next gig might be in France or Norway.

Whether you charge expenses to you customer is up to you/your contract. I don't. Normal travelling expenses are paid for by my company, even for customer requested journeys. My daily rate includes enough to cover normal travel costs.

If you have a company registered in England (I assume Scotland is simmilar) then there's no reason you can't have a company bike but customers in France or Norway. Not using the bike for company business is, from the company perspective, no different to a construction company not using a particular bit of specialised pland because they don't take on contracts for spicific constructions.

OutInTheShed said:

It's not like the good old days of 60p/mile for a private 3 litre car is it? (and fuel was 48 p a litre then!).

Of course I might have dropped 'company bike' into a few conversations to outrage the odd permie...

I don't think 60p was an HMRC approved rate!

[turbospud]

the company should also provide training so you are still around to operate said company.
ideally in a closed environment like donnington with their instructors

[OutInTheShed]

black-k1 said:

I don't think 60p was an HMRC approved rate!

Might have been 58p, it was a long time ago (1997?) and the evidence is long shredded. Just the tax saving on 3ltr shed expenses made driving business miles profitable, even at 18mpg. I think the break was at 2.5 litres or something?

Not sure you follow the BIK consequences of travel to the same client (or even 'same' commute to different client) as your contract starts to look 24 months long. Or maybe that's changed now?

Part of my problem was that when business was good, I didn't have time to go to bike showrooms. And when I had time, I didn't want big spending commitments until I'd paid off the mortgage.