Reply to: Sell my electric bicycles to my business for commuting

[meridian]

Answer to HMRC is simple basic math:
- Let say I have 1 bike only, and let consider I have 5 majors incident a year (typical for ebikes), which would clamp me down for at least 1 week and some more time for a total of £200. Let's add £200 in repair cost + £100 for super quick shipping because I can't wait for 1 month for the item to arrive.

So in 2 years with a bike valued at £1000, £200 repair cost a year, £200 in major incident a year and £100 for quick shipping, I have a total cost of £1800. However, my bike will still hold half of it's value, which is £500. So my total cost in 2 years is £1500.

- Now, let say I have 2 bikes, each of them worth £1000 and add £200 in repair cost a year and no tfl charge.
In 2 years time, I have 2* £1000 bike initial value + £400 repair value - £1000 remaining bike value = £1400

So yes, it is actually saving me money to have 2 bikes compared to one. And as 1 year of TFL in zone 1-2 cost £1284, with 2 bikes I'd have already have my money back as they will still hold 50% of their value, whereas with the TFL it's money lost.

Same as buying property, it's an investment. I invest in electric bicycles because it's quick, fast, cheap (way cheaper than TFL in the long term) and I can do long distance without sweating on it.


Does that answer the questions of people questioning the cost of electric bicycles? It's cheaper than TFL by miles.

I'm going to be contrary and say that yourco owning two of your bicycles shouldn't pose too much of a problem to HMRC. How yourco spends its money is none of HMRC's business - they are concerned with whether the cost is deductible, and the value of that deduction. They don't disallow an expensive car just because you could buy a cheaper one, the focus of any investigation will be on whether they are both entirely for business use, and the personal ownership of another 3 bicycles will stand in your favour.

However, they will likely have an issue with your market value. As anyone that has built a pc knows, the sum of parts does not equal the market value of the whole, so your market value methodology will be challenged. Further, HMRC's own guidance is that after one year the market value of a bicycle is only 25% of original value. Now you may have an argument that as yours are electric then a different percentage should apply, but you're raising red flags for additional queries in your accounts.

Your maths also seems a bit off. At the moment you're claiming 20p per mile. You won't be able to claim that if the business owns the bicycles, but you state there's £400 in repairs per year. The first challenge from HMRC will be whether all of that £400 is for the business bikes, which will open you up to an investigation into your personal affairs for them to verify the comparison of personal expenditure vs business expenditure on repairs. You do have additional repair expenditure on your personal bicycles, don't you? They'll also examine why you have £400 across both bikes when they are only being ridden half the time each for business. The second part is whether your loss of 20p per mile is offset by any repair costs. As a rough calculation, £400/0.20/220 billing days = a bit over 9 miles round trip, if your commute is more than this then you're losing out.

You also need to be realistic about whether you would go for immediate shipping when it's clear that you have 3 other bicycles available at your disposal. While HMRC won't care if you waste money on fast shipping when you clearly have another means of transport (you can waste your own money however you like), they will care about the deductibility so you can bet that you will need to be very explicit in verifying that this fast shipping is 100% for business repairs and does not include spare parts for personal bicycles. You will also need to be certain that these are repairs (seriously, if it's costing you this much per bike every year then get a better warranty) or are capital improvements that should be depreciated.

No idea what you're valuing £200 in "major incident" as. Is this an actual cost?

[tractor]

.....

Yes, and surely a troll would have two bridges. One to hide under, and a spare in case the first one collapses

This one has a big belly too cos it's eaten all that has been thrown at it.

[aoxomoxoa]

It's got to be a troll.

Yes, and surely a troll would have two bridges. One to hide under, and a spare in case the first one collapses

[TykeMerc]

I think you have to be right here.

It's a scary prospect that anyone could be so astoundingly dense that this would seem like a good idea to start off let alone after the reasoned and eventually exasperated explanations on the thread. It's got to be a troll.

[GillsMan]

It's the gift that keeps on giving...

Yeah, it's awesome.

[Scruff]

God, why is this thread still going?

It's the gift that keeps on giving...

[tractor]

...

[GillsMan]

Answer to HMRC is simple basic math:
- Let say I have 1 bike only, and let consider I have 5 majors incident a year (typical for ebikes), which would clamp me down for at least 1 week and some more time for a total of £200. Let's add £200 in repair cost + £100 for super quick shipping because I can't wait for 1 month for the item to arrive.

So in 2 years with a bike valued at £1000, £200 repair cost a year, £200 in major incident a year and £100 for quick shipping, I have a total cost of £1800. However, my bike will still hold half of it's value, which is £500. So my total cost in 2 years is £1500.

Blah blah blah waffle and nonsense.

Stop lying ffs! 5 major incidents a year?? That absolutely isn't typical at all. The general suggestion is one service per year based on an average usage of 2,000 miles pa. Service your bike, treat it well and you won't have that many issues. You obviously haven't got a clue what you're doing if you've managed to buy 5 complete POS bikes which are failing you every ten weeks or so.

Shall I repeat myself again? You're a one man band. There's only one of you. You're not intending to use two bikes to use at either end of a train journey. Putting two bikes through is taking the piss. What is so difficult for you to understand?

Fine, do it. I seriously hope HMRC investigate you, because frankly you're a charlatan. You pretended to ask for advice, but really you just wanted us to ratify your brain dead idea. Good luck. You'll need it. I hope you're better at whatever it is you're mugging your client off for a daily rate than you are at accounting and listening to reason.

[eek]

Why don't you buy a Harley Davidson, sell it to your Company and call it an electrically started motor bicycle? Claim it to be an Eco Twaddle and apply to the European Union for a non repayable grant. Tell HMRC that you are a rocket scientist and deserve special treatment under the Magna Carta and that you are Walter Mitty.

ftfy based on the mad people being discussed in law in action this afternoon.

[Scruff]

Why don't you buy a Harley Davidson, sell it to your Company and call it an electrically started motor bicycle? Claim it to be an Eco Twaddle and apply to the European Union for a non repayable grant. Tell HMRC that you are a rocket scientist and deserve special treatment under the Official Secrets Act and that you are Walter Mitty.

[mudskipper]

Answer to HMRC is simple basic math:
- Let say I have 1 bike only, and let consider I have 5 majors incident a year (typical for ebikes), which would clamp me down for at least 1 week and some more time for a total of £200. Let's add £200 in repair cost + £100 for super quick shipping because I can't wait for 1 month for the item to arrive.

So in 2 years with a bike valued at £1000, £200 repair cost a year, £200 in major incident a year and £100 for quick shipping, I have a total cost of £1800. However, my bike will still hold half of it's value, which is £500. So my total cost in 2 years is £1500.

- Now, let say I have 2 bikes, each of them worth £1000 and add £200 in repair cost a year and no tfl charge.
In 2 years time, I have 2* £1000 bike initial value + £400 repair value - £1000 remaining bike value = £1400

So yes, it is actually saving me money to have 2 bikes compared to one. And as 1 year of TFL in zone 1-2 cost £1284, with 2 bikes I'd have already have my money back as they will still hold 50% of their value, whereas with the TFL it's money lost.

Same as buying property, it's an investment. I invest in electric bicycles because it's quick, fast, cheap (way cheaper than TFL in the long term) and I can do long distance without sweating on it.


Does that answer the questions of people questioning the cost of electric bicycles? It's cheaper than TFL by miles.

According to the HMRC guidance, the fair market value after 2 years is 17%. Which means if yourCo buys a bike for £1000, after 2 years they can sell it to you for £170. You'd be daft to argue it's still worth £500.

Why don't you ring HMRC and ask them? It's clear you're not going to get an answer you're happy with here.

[eek]

You think HMRC will care about that simple maths you either fit into their rules or you don't

[cwah]

Answer to HMRC is simple basic math:
- Let say I have 1 bike only, and let consider I have 5 majors incident a year (typical for ebikes), which would clamp me down for at least 1 week and some more time for a total of £200. Let's add £200 in repair cost + £100 for super quick shipping because I can't wait for 1 month for the item to arrive.

So in 2 years with a bike valued at £1000, £200 repair cost a year, £200 in major incident a year and £100 for quick shipping, I have a total cost of £1800. However, my bike will still hold half of it's value, which is £500. So my total cost in 2 years is £1500.

- Now, let say I have 2 bikes, each of them worth £1000 and add £200 in repair cost a year and no tfl charge.
In 2 years time, I have 2* £1000 bike initial value + £400 repair value - £1000 remaining bike value = £1400

So yes, it is actually saving me money to have 2 bikes compared to one. And as 1 year of TFL in zone 1-2 cost £1284, with 2 bikes I'd have already have my money back as they will still hold 50% of their value, whereas with the TFL it's money lost.

Same as buying property, it's an investment. I invest in electric bicycles because it's quick, fast, cheap (way cheaper than TFL in the long term) and I can do long distance without sweating on it.


Does that answer the questions of people questioning the cost of electric bicycles? It's cheaper than TFL by miles.

[GillsMan]

You are wrong.

From the cycle-to-work-guidance.pdf notes on the gov.uk website :



Why do people here make such a song and dance without even bothering to check their facts first ? GillsMan ?


Anyway, the only significant issue I see with the OP's suggestion is that the value of secondhand bikes is rather unlikely to be anything like 80% of the new cost. I would think that the safe figure would be as per the update to the guidance notes above, also available from gov.uk here:

Boo

Nope, I am right, hahahaha. The OP is not talking about having two bikes for either end of a journey. He's talking about two bikes in case one breaks down. Get your own facts straight maybe?

[TheCyclingProgrammer]

God, why is this thread still going?