Buying a motorbike through a Ltd Company...

[Freud]

Interesting thread. I didn't know that motorbikes could be bought through a company and be financially better than a car.

I was looking at purchasing a 125cc scooter for commuting to work. No personal use, the only reason for buying is to avoid public transport.

I was going to purchase personally but this has got me thinking.

I have been looking at a used scooter. I assume I can still purchase a used scooter through the company or does it have to be a new scooter ?
I would imagine the benefit of a new bike is reclaiming the VAT which you can't do on used ?

I am on the Flat Rate scheme so I guess claiming VAT back has no advantage hence a used bike is better all round as it is cheaper ?

If I have not claimed VAT on the purchase, do I still need to charge VAT on the sale ?

[Freud]

Hi Guys,

Thanks for the prompt feedback. "NorthernLad" added a link to an old thread that was useful, the basics copied below:

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To buy the bike through the company
•Ask for the invoice to be in the company name
•Ask for the V5 to refer to you as the registered keeper at your home address
•Have your company buy the insurance in your name
•have you company buy your protective gear
•reclaim the vat
•ask your Accountant to claim 100% annual investment allowance in 1st year
•Use your company debit card to purchase all fuel and consumables ongoing
•Your company pays for all parts, servicing, tyres…..

So say the bike costs £6000 inc vat you'll get £1000 vat back and a £1000 reduction in your corporation tax
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However, from what I read you can only do the above if the bike is solely used for travel to work. Which this won't be. It will be a mix of both.

I'll continue with my accountants advice by the looks of things, but thanks anyway.

Also, in relation to the insurance mentioned above, where you are not claiming any personal use for the bike, does it have to be Business Insurance or can you just take out Social, Domestic incl Commuting (which is cheaper), or would this raise questions from HMRC as to the legitimacy of 100% business use ?

[northernladuk]

Also, in relation to the insurance mentioned above, where you are not claiming any personal use for the bike, does it have to be Business Insurance or can you just take out Social, Domestic incl Commuting (which is cheaper), or would this raise questions from HMRC as to the legitimacy of 100% business use ?

It would raise questions from more than HMRC if you only have social, domestic and commuting when you are doing non of those things. You would need business use as you are travelling on business to your clients, hence you being able to claim the mileage back (unless you've got 24 month issues). With car insurance you can often get business use added on for next to nothing. Not so sure it's the same with bikes. You'd have to ask some insurance companies.

I presume you've seen the discussion over having it at home means it's available for personal use which could be enough for BiK to kick in unless you've got some fool proof method of proving to the tax man it is genuinely for work use. You could argue a scooter is hardly a tool for blasting around the country side in but then if you do live in London it is a fairly standard get about tool. Guess that's up to you and your attitude to risk.

Your accountant is the best person to run the numbers for you. Might be worth buying it personally and just claiming the 24p per mile. If you do then drop them here. We've yet to see the actual figures of someone doing this which would be interesting.

[TheCyclingProgrammer]

I am on the Flat Rate scheme so I guess claiming VAT back has no advantage hence a used bike is better all round as it is cheaper ?

If I have not claimed VAT on the purchase, do I still need to charge VAT on the sale ?

1. Depends on the price of the bike. If it's more than £2k including VAT you could reclaim the VAT.

2. Yes you would. If you reclaimed VAT you must account for the sale outside the FRS (account for VAT in standard way). If you did not, account for the sale under the FRS like any other sales (it's part of your flat rate turnover).

[Freud]

It would raise questions from more than HMRC if you only have social, domestic and commuting when you are doing non of those things. You would need business use as you are travelling on business to your clients, hence you being able to claim the mileage back (unless you've got 24 month issues). With car insurance you can often get business use added on for next to nothing. Not so sure it's the same with bikes. You'd have to ask some insurance companies.

I presume you've seen the discussion over having it at home means it's available for personal use which could be enough for BiK to kick in unless you've got some fool proof method of proving to the tax man it is genuinely for work use. You could argue a scooter is hardly a tool for blasting around the country side in but then if you do live in London it is a fairly standard get about tool. Guess that's up to you and your attitude to risk.

Your accountant is the best person to run the numbers for you. Might be worth buying it personally and just claiming the 24p per mile. If you do then drop them here. We've yet to see the actual figures of someone doing this which would be interesting.

Thanks.

At the moment, I am not caught by the 24 month rule but could be in 23 months time so would need to take a view nearer that time and either sell the bike or stop claiming the 24p per mile.

The sole purpose of the bike is for commuting only. As such, back and forth from home (where my normal place of work is) and the client is the sole purpose. The insurance options I have seen are either SDP Inc commuting or Business only.

Business only would suit me fine and I guess would make HMRC more comfortable but it is £150 per annum more, hence the question.

I have seen conflicting advice on this, some people say it is OK to have the insurance in your name and others say it must be in the company name. The latter is harder to come by for a reasonable price. What is other people's experience/approach with this.

1. Depends on the price of the bike. If it's more than £2k including VAT you could reclaim the VAT.

2. Yes you would. If you reclaimed VAT you must account for the sale outside the FRS (account for VAT in standard way). If you did not, account for the sale under the FRS like any other sales (it's part of your flat rate turnover).

The used bike I have looked would come to approx £2,500 with a few accessories. As you say, I have looked into a little more and you are right that even when on FRS, you can claim VAT on assets over £2k and would need to charge VAT on the sale.

I need to weigh up the pros and cons of putting it on the company or buying and claiming the mileage.

The mileage claim would be easier but also it would be good to get the company to pay for it instead of taking the money as dividends to achieve the same thing. When you factor in the costs vs mileage claim up to 23 months, they work out to about the same. Hmmm.

[Yorkie62]

Forget the panagale

Just drafted a similar question - thank god that I checked and saw this thread running or NL would have "gutted me"

So the question - can a motorcycle be wriiten down/off over 12months (plant rules?) and sold for a notional £1 at the end? Can I buy it from the company?

Have my own private bike (KTM RCR8 ) so no need to use the "company R1200/K1600 (or should I simply get the Panigale ) and so in my case it would solely be business biased.

Forget the panagale buy a multistrada fully kitted up for touring. Even better use ducati''s pcp scheme to buy. I use my multi for my weekly commute occasionally. Get everything I need in the panniers and top box with all the fun of the twin spark testaretta engine.

[Freud]

Thanks.

At the moment, I am not caught by the 24 month rule but could be in 23 months time so would need to take a view nearer that time and either sell the bike or stop claiming the 24p per mile.

The sole purpose of the bike is for commuting only. As such, back and forth from home (where my normal place of work is) and the client is the sole purpose. The insurance options I have seen are either SDP Inc commuting or Business only.

Business only would suit me fine and I guess would make HMRC more comfortable but it is £150 per annum more, hence the question.

I have seen conflicting advice on this, some people say it is OK to have the insurance in your name and others say it must be in the company name. The latter is harder to come by for a reasonable price. What is other people's experience/approach with this.



The used bike I have looked would come to approx £2,500 with a few accessories. As you say, I have looked into a little more and you are right that even when on FRS, you can claim VAT on assets over £2k and would need to charge VAT on the sale.

I need to weigh up the pros and cons of putting it on the company or buying and claiming the mileage.

The mileage claim would be easier but also it would be good to get the company to pay for it instead of taking the money as dividends to achieve the same thing. When you factor in the costs vs mileage claim up to 23 months, they work out to about the same. Hmmm.

1) Is anyone doing this ?
2) Can I claim VAT back on a used bike, assuming I have a VAT invoice ?
3) if it is for business use (even if you say 95% to get around the availability issue), do you only pay 5% of the 20% BiK value instead of the full 20% ?

I have asked my accountant and he seems to think no for 2 and 3

[TheCyclingProgrammer]

1) Is anyone doing this ?
2) Can I claim VAT back on a used bike, assuming I have a VAT invoice ?
3) if it is for business use (even if you say 95% to get around the availability issue), do you only pay 5% of the 20% BiK value instead of the full 20% ?

I have asked my accountant and he seems to think no for 2 and 3

2. If you have a valid VAT invoice then the same rules apply as new vehicles*, but if you buy it second hand from a dealer they may be using the VAT margin scheme so will not be able to provide you with a VAT invoice and you will not be able to reclaim anything (and obviously a private seller will not be charging VAT so nothing to reclaim there either).

*As with new vehicles it must be exclusively for business use and not "made available" for personal use otherwise no VAT is reclaimable:

https://www.gov.uk/reclaim-vat/cars

If the vehicle is kept at home then its very unlikely you'd pass the "exclusively for business" test as it will be available for your use.

[Yorkie62]

1) Is anyone doing this ?
2) Can I claim VAT back on a used bike, assuming I have a VAT invoice ?
3) if it is for business use (even if you say 95% to get around the availability issue), do you only pay 5% of the 20% BiK value instead of the full 20% ?

I have asked my accountant and he seems to think no for 2 and 3

definitely no for 2. As soon as you use it for personal use the full BIK @20% becomes payable. I would assume you can only claim the VAT if the original VAT invoice is in you co name for which you have used for personal use an therefore BIK is applicable. I would have thought you are better off owning the bike yourself and claiming miles.

[Freud]

definitely no for 2. As soon as you use it for personal use the full BIK @20% becomes payable. I would assume you can only claim the VAT if the original VAT invoice is in you co name for which you have used for personal use an therefore BIK is applicable. I would have thought you are better off owning the bike yourself and claiming miles.

OK, this is confusing.

I understand the VAT and margin VAT issue, that is not an issue. If the invoice lists VAT, then it is potentially claimable. If it does not list VAT (eg under the VAT margin scheme) then there is nothing to claim.

As regards BIK and the question of being charged 20% in full or not, this is the bit where people are giving conflicting advice.

My accountant and others have said no, you have to take the full 20% BiK charge whereas other things I have read suggest not. See here Motor Bikes and Benefits in Kind

They both suggest that the BiK can be off set by the amount of business usage.

In my case it will be 100% but my accountant said that as it would be stored at home, I have access and therefore hard to prove non personal usage hence my suggestion above of 95% business and 5% personal to avoid the discussion with HMRC.

Is anyone an accountant or who has used this scheme can comment ?