Motorbikes are a fast, efficient and, let’s face it, pretty cool way of getting around. So what could be better than making your daily commute on a Ducati, Suzuki or even a Harley Davidson? It’s not just the fun factor that makes them a great alternative to the traditional company car; they also have some serious tax benefits.
The tax and NI cost of a company motorcycle is generally lower than a car of similar value, as the taxable ‘benefit-in-kind’ (Bik) is calculated differently. HMRC classes them as ‘plant or machinery’ and therefore considers them to be an ‘asset’, so the BiK is calculated at 20% of the total cost (including VAT) of the bike.
So, if a company bought an employee a second-hand company motorbike for £4,000, the taxable BiK would only be £800 for 2015/16, and if the running costs are paid for by the company there’d be an additional BiK of 20% of these annual costs. In contrast, a second-hand car bought for £4,000 (with an original value of £20,000) would incur a taxable benefit of £7,400 plus a fixed charge of £8,177 if the company pays for fuel.
As well as much lower tax charges for the employees, the company also pays less by using motorcycles as company vehicles. Businesses pay Class 1A NIC at 13.8% on most benefits. Using the example above, the Class 1A NIC due on the motorcycle would be just £110, whereas it would be much more at £2,150 for the car! So it’s definitely worth considering a change to two wheels!
Before you turn your workforce into bikers please do check that the invoice is in the company name, and the bike is under the businesses ownership (the log book should be in the company’s name).
If you’d like more information on company vehicles or any other ‘benefit-in-kind’, please do get in touch on 01782 279615.