Buying a bike if you're self employed

secretsam

If I understand correctly, you can't do C2W if, like me, you are self-employed - I have a limited company, with one Director - me.

If C2W is no good, what's the best way to save some dosh on a new bike for us self-employed folk, who miss out on this particular tax break?

Am VAT registered, if that matters. And I have an accountant but she's not been all that much use in this case.

asprilla

Hmm.

You can claim 20p per mile tax relief, but apparently this doesn't apply to 'ordinary commuting'. It does count for travelling to client's offices though. Not sure where HMRC stand, but probably on 'not letting you claim a dammed thing' side.

http://www.hmrc.gov.uk/incometax/relief-travel.htm

The important bit is:

You can only get tax relief on the cost of business journeys. These are when, as part of your job:
- you have to travel from one workplace to another - this includes travelling between your main 'permanent workplace' and a temporary workplace
- you've got to travel to or from a certain workplace because your job requires you to


I guess it depends on the definition of 'permanent workplace' and you may have to get that written into your contracts.

daviesee

I have taken full advantage of what is on offer. And no, I am not ashamed.

If you (or anyone else) are self employed then you need to read this:-

http://www.hmrc.gov.uk/manuals/eimanual/eim21664.htm

and

http://www.hmrc.gov.uk/manuals/eimanual/eim21668.htm

My "designated cycle to work days" are Monday to Thursday

In other words, your company can buy bikes, safety gear and breakfasts (as long as it is available to all employees) and it all comes off the company top line. i.e. before tax.
Oh! And as I am on the flat rate VAT scheme, VAT can be claimed back on any single invoice (complete bike and gear) over £2000. i.e. There is no point in buying a bike for £1500-£1600 when you can buy one for £2000 and claim @ £400 back

Edit:- My accountant wasn't aware of any of these advantages either but once I pointed them out they were given the all clear. :P

meanredspider

daviesee wrote:

I have taken full advantage of what is on offer. And no, I am not ashamed.

Starbucks
Amazon
Google
Apple
daviesee...

daviesee

meanredspider wrote:

daviesee wrote:

I have taken full advantage of what is on offer. And no, I am not ashamed.

Starbucks
Amazon
Google
Apple
daviesee...

The government wants to entice me to be "green" and get on my bike. Who am I to argue?

PS:- I do pay my full share of income tax, N.I., corporation tax and VAT. Although offered offshore schemes, I have always declined.

daviesee

Oh,
I forgot to add, looking forward you can also put servicing and repairs through as well.
Tyres, pads, rims/wheels, chains, cassettes................

spasypaddy

if you have a limited company you should if youve got a good accountant have a payroll system which means you can get R2W.

daviesee

spasypaddy wrote:

if you have a limited company you should if youve got a good accountant have a payroll system which means you can get R2W.

Buying a company bike is more efficient, especially in the long run.
There was a post a few weeks ago from a guy where buying on R2W worked out more expensive than simply buying a bike on sale. :shock:

gbsahne001

and

EIM21668 - Particular benefits: bicycles: cyclists’ meals and refreshments on “cycle to work” days
S.I.2002 No. 205

Some employers designate a few days each year as "cycle to work" days. In order to encourage employees to participate the employer may provide a free meal or refreshments to employees who have cycled to work. Under general principles such meals are a taxable benefit in kind but regulations exempt them from tax, as long as they are provided on designated "cycle to work" days.

time to petition the office for food!

TheStone

As daviesee says, your company just buys the bike.
It becomes an asset of the company, but depreciates (3 years, I think).

It works out similar, but a bit better than the R2W scheme and you're fully in control.

Which reminds me, my company bike is 7 years old now. Hmmm.

Edit to add: I've never claimed any of the other stuff food/clothes/helmets, but I'm sure you can.

spasypaddy

daviesee wrote:

spasypaddy wrote:

if you have a limited company you should if youve got a good accountant have a payroll system which means you can get R2W.

Buying a company bike is more efficient, especially in the long run.
There was a post a few weeks ago from a guy where buying on R2W worked out more expensive than simply buying a bike on sale. :shock:

that maybe, but because hes the owner of the company and hes VAT registered he will make a bigger saving that a normal employee. especially as theres no need to transfer the ownership at the end of the first year

TheStone

meanredspider wrote:

daviesee wrote:

I have taken full advantage of what is on offer. And no, I am not ashamed.

Starbucks
Amazon
Google
Apple
daviesee...

They pay no tax, so can't make any tax saving by buying a company bike.

secretsam

meanredspider wrote:

daviesee wrote:

I have taken full advantage of what is on offer. And no, I am not ashamed.

Starbucks
Amazon
Google
Apple
daviesee...

That's not just disingenuous, it's actually quite offensive. Those companies evade tax by claiming their activities are carried out in non-UK locations when clearly this is not the case - thereby evading the tax. I am a proud and honest taxpayer, who is simply looking to benefit from tax avoidance (note that this is avoidance - which is legal) in the same way as those taking advantage of C2W are able to.

daviesee

SecretSam wrote:

That's not just disingenuous, it's actually quite offensive. Those companies evade tax by claiming their activities are carried out in non-UK locations when clearly this is not the case - thereby evading the tax. I am a proud and honest taxpayer, who is simply looking to benefit from tax avoidance (note that this is avoidance - which is legal) in the same way as those taking advantage of C2W are able to.

I took it that MRS was being light hearted. I am not offended. :P

meanredspider

SecretSam wrote:

meanredspider wrote:

daviesee wrote:

I have taken full advantage of what is on offer. And no, I am not ashamed.

Starbucks
Amazon
Google
Apple
daviesee...

That's not just disingenuous, it's actually quite offensive. Those companies evade tax by claiming their activities are carried out in non-UK locations when clearly this is not the case - thereby evading the tax. I am a proud and honest taxpayer, who is simply looking to benefit from tax avoidance (note that this is avoidance - which is legal) in the same way as those taking advantage of C2W are able to.

Well - several things:
- Firstly, are you being offended on daviesee's behalf?
- Secondly, all of these companies claim they're operating within the tax laws and "have taken full advantage of what is on offer"
- Thirdly, and most importantly, it was a joke - as indicated by the smilies and winkies :roll:

meanredspider

daviesee wrote:

SecretSam wrote:

That's not just disingenuous, it's actually quite offensive. Those companies evade tax by claiming their activities are carried out in non-UK locations when clearly this is not the case - thereby evading the tax. I am a proud and honest taxpayer, who is simply looking to benefit from tax avoidance (note that this is avoidance - which is legal) in the same way as those taking advantage of C2W are able to.

I took it that MRS was being light hearted. I am not offended. :P

Thank you - I'm delighted you spotted that

davis

meanredspider wrote:

daviesee wrote:

SecretSam wrote:

That's not just disingenuous, it's actually quite offensive. Those companies evade tax by claiming their activities are carried out in non-UK locations when clearly this is not the case - thereby evading the tax. I am a proud and honest taxpayer, who is simply looking to benefit from tax avoidance (note that this is avoidance - which is legal) in the same way as those taking advantage of C2W are able to.

I took it that MRS was being light hearted. I am not offended. :P

Thank you - I'm delighted you spotted that

I'm actually quite offended by this sort of thing.

daviesee

davis wrote:

I'm actually quite offended by this sort of thing.

You are quite offended by people not being offended?
I could nearly care.

dhope

SecretSam wrote:

meanredspider wrote:

daviesee wrote:

I have taken full advantage of what is on offer. And no, I am not ashamed.

Starbucks
Amazon
Google
Apple
daviesee...

That's not just disingenuous, it's actually quite offensive. Those companies evade tax by claiming their activities are carried out in non-UK locations when clearly this is not the case - thereby evading the tax. I am a proud and honest taxpayer, who is simply looking to benefit from tax avoidance (note that this is avoidance - which is legal) in the same way as those taking advantage of C2W are able to.

Well, until HMRC dictate otherwise then Google, Amazon et al are just avoiding tax rather than evading too. Just more aggressively.

meanredspider

Holey Moley - the "Chat" forum has had a sense of humour failure today. I didn't realise tax was such a touchy subject - the last taboo!

Lining up daviesee (who might be the owner of a global conglomerate..... but probably not ) with some of the biggest names in the world, was clearly meant to be humorous - I'm sorry if that went over your head.

And, on a more serious note, posting on a public forum claiming these big companies are "evading" tax might be seen as defamation...

mrfpb

There is a difference in taking advantage of tax incentives like c2w, where the govt is promoting bike use or normal tax allowances such as for work costs (buying a company car/van/bike) and the actions of multi nationals playing one system against another.

Anyway one mini-rant over (apologies MRS) here's another. Why is it that with C2W you pay the full cost of the bike and gear out of your salary (before deductions) then have to pay an additional 15 % of the bikes full value at the end of the "hire" period. Your paying twice for the same bike - 100% of cost new plus the estimated second hand value of the bike a year (or more) later. I know their is an advantage to paying from gross salary, but it still doesn't strike me as a particularly fair deal.

I've also read there are disadvantages for those receiving tax credits, but that has never been explained in detail, and I wouldn't want to fill out my tax credit form after a year and find I'm paying back the money I thought I'd saved.

secretsam

Sorry for the sense of humour failure

It's the end of my financial year, so am busy calculating the extent of my tax liability - unlike for those on PAYE, us self-employed folk pay it all in one, big fat lump

meanredspider

SecretSam wrote:

Sorry for the sense of humour failure

It's the end of my financial year, so am busy calculating the extent of my tax liability - unlike for those on PAYE, us self-employed folk pay it all in one, big fat lump

No worries - we all hate tax

dhope

SecretSam wrote:

Sorry for the sense of humour failure

It's the end of my financial year, so am busy calculating the extent of my tax liability - unlike for those on PAYE, us self-employed folk pay it all in one, big fat lump

Yeah, you get to earn interest on it all year long
Can you dump everything into an offset mortgage throughout the year to reduce those payments?

mrfpb

dhope wrote:

SecretSam wrote:

Sorry for the sense of humour failure

It's the end of my financial year, so am busy calculating the extent of my tax liability - unlike for those on PAYE, us self-employed folk pay it all in one, big fat lump

Yeah, you get to earn interest on it all year long
Can you dump everything into an offset mortgage throughout the year to reduce those payments?

Paying less interest on the company overdraft is more likely. Interest paid is taxable as well. My brief (two year) experience of self employment will come to an end when I complete this years tax return, so I sympathise SecretSam. I wasn't able to justify buying a bike for my business, but if I'd been able to carry on maybe I would have. As i said earlier, I don' think C2W schemes are particularly great value, especially if you get tied to a particular shop.