What is the tax liability for a company motorcycle?

[Hiram King Of Tyre]

I'm doing about 22k miles a year now and am thinking about doing some of that on a company owned motorcycle. Does anybody know what the tax liability would be?

[Crossroads]

Tax Liability is next to nothing, but keep it quiet or everyone will get a bike and Hector will change the rules.

[Hiram King Of Tyre]

How is it calculated? I heard 20% but 20% of what?

[Hiram King Of Tyre]

Not many bikers around I guess?

[Nixon Williams]

The benefit in kind value of the asset is calculated as 20% of the total cost (including VAT) of the motorbike. Therefore if the motorbike costs a total of £8,000, the benefit in kind to the employee will be £1,600 (£8,000 X 20%).

The benefit is apportioned where it is only available for part of a year.

The tax charge continues to be payable for as long as the asset is made available.

The employee pays tax at their highest rate on the benefit in kind value. Therefore if they are a higher rate taxpayer and have a new motorbike costing £8,000 the extra tax they would pay would be £640 per annum. (£8,000 X 20% X 40%).

The company would also pay 12.8% National Insurance on this benefit amount as declared on the P11d. This is payable by 19th July after the end of the tax year.

Hope this helps?

Alan

[Hiram King Of Tyre]

Thanks Alan, a good quality answer.

I assume that the company reclaiming the VAT has no bearing on this other than when it sells it it must charge VAT on the sale price (and make a small profit on that if on the FRS).

Further questions though:

Is there no personal tax liability on servicing, tyres etc?

What's the situation regarding fuel? Do I pay it myself and claim a mileage rate? If so what? Or does the company pay? Assume say 80% company mileage

What about "protective clothing" can the company but this for me?


Thanks

[Nixon Williams]

If VAT is reclaimed, then when the bike is sold VAT would be charged at the current rate.

If the running costs (insurance, maintenance etc) of the motorbike are paid by the company there is an additional benefit in kind of 20% of this annual cost. This would also include fuel costs and protective clothing.

You would not claim a mileage rate as the bike would not be owned by you but your own company.

Alan

[Hiram King Of Tyre]

OK thanks, that helps.

I know that with company cars, employees normally claim about 10-12p back. With a bike though, you're saying that for personal mileage, I would have to just pay tax on it as a BIK?

If my salary + divvies takes me up to just below the 40% threashold, does this BIK add up and take me over or would it still be worked out at 20/22%?

[THEPUMA]

If the running costs (insurance, maintenance etc) of the motorbike are paid by the company there is an additional benefit in kind of 20% of this annual cost. This would also include fuel costs and protective clothing.

The additional benefit-in-kind would be the total additional costs, not 20% of them.

[Hiram King Of Tyre]

The additional benefit-in-kind would be the total additional costs, not 20% of them.

How are you working that out?

I thought Alan's point was either:

1) If 20% of mileage was personal, there would be a BIK of 20% of the running costs. I would have to pay tax on this BIK
2) If 20% of mileage was personal, I would have to pay the company 20% of running costs

I think he meant 1)