Limited company and bicycle purchase

samsbike

A friend of mine works through his own limited company and has asked me advice about buying a bike through the company (I help him with his accounts). He plans to use it for commuting. Is a bike a legitimate purchase and does it incur a benefit in kind?

I don't see the point of him going through cyclescheme or anything or the paperwork would make it a nightmare.

cheers for any advice

monkimark

I seem to remember asking a similar question and being told it made more sense from a tax point of view to buy the bike yourself and then pay 20p a mile on expenses for using the bike.
My commute is pretty small but that's still about £700 a year for nowt.

edit - that is of course £700 paid tax free, I still have to earn it.

The Rookie

You can't claim mileage to and from your permanent place of work.

You can run your own C2W, you can change yourself as much (tax free) rental as you like (as long as it's justifiable)......personally I'd go that route and maximise (legitimately) your tax free payments.

ex-pat scot

If he has a limited company, then he can either:
1. use personal bike and charge 20p /mile for all qualifying business travel
2. co buys bike then it leases him the bike under a cyclescheme.
3. co buys the bike and makes it available for use by employees (hint: if he's running a service company with small no of employees (or only himself), then this is great). NB as the company retains ownership, you can't claim mileage (but you can claim maintenance etc).

http://www.nixonwilliams.com/images/pdf ... Cycles.pdf

as I understand it, these methods do not give rise to any BIK issues.

Which to choose? Depends on the value of the bike and the number of miles travelled on company business.
If he's doing lots of miles on a relatively cheap bike, then it's probably better to go down the personal route.
If he's fancying a nice bike, then probably better to use option (3).

The link to Nixon Williams provides a consistent view that I share with fellow contractors who are cycling enthusiasts.
The other question you should be asking is his VAT status. If he's on the Flat Rate VAT scheme, and the purchase is over £2,000, then he can reclaim the VAT element of purchase price.



MyCo owns a titanium Brompton, as well as a Cervelo...

ex-pat scot

and I presume that he has designated his permanent place of work for HisCo as his home address, and the daily travel you mention as "commuting" is actually business travel from his home office to client address?

samsbike

Thanks for that. Place of work is where he rents his office and travel is very low.

However having read the note posted above he can claim from home to work, which is fine and will cover the qualifying mileage.

The Rookie

ex-pat scot wrote:

and I presume that he has designated his permanent place of work for HisCo as his home address, and the daily travel you mention as "commuting" is actually business travel from his home office to client address?

You can't do it like that, your permanent place of work is a fact and not what you contrive it to be, for a contractor working at a single location (at any one time) it's that location, if he works at multiply locations or does WFH most the time, then he can use his home address.

You realise that inciting is a criminal offence right? Personally I wouldn't broadcast the fact I'm committing one to the whole world.

ex-pat scot

Not at all!
I am a contractor and work for a number of customers at different locations. I could designate my home office as my study. (I'm not sure that I was ever broadcasting my personal circumstances though).

If one is expecting to be working in another location for more than 24 months, then under HMRC rules one would have to designate one's normal place of work as at the client site. NB there's lots more around how much of the week is performed at each location: it would be wise to read up about it. There's quite a bit of information on HMRC website, if you are curious.

The Rookie

Read what I wrote, in your situation (now clarified) then it's OK, if you have a single place of work then it's almost certainly not (which appeared to be what Sam has suggested in the post above mine and below yours).

It can be OK to claim it, it can be not OK, blanket advice can't be given without knowing much more about a particular set of circumstances than saying he's self employed, and you appear to be leading Sam down the route of telling his friend he can commit tax evasion.

samsbike

The Rookie wrote:

Read what I wrote, in your situation (now clarified) then it's OK, if you have a single place of work then it's almost certainly not (which appeared to be what Sam has suggested in the post above mine and below yours).

It can be OK to claim it, it can be not OK, blanket advice can't be given without knowing much more about a particular set of circumstances than saying he's self employed, and you appear to be leading Sam down the route of telling his friend he can commit tax evasion.

Cheers all. Just to clarify its not a home to work commute as its only one place of work. Therefore company purchase would seem to be the best bet.

RufusA

Also worth noting, if the bicycle is purely a company loan bicycle then:

a) AFAIK there is no hire element, so no consumer credit agreement needed and hence no 1k limit.
b) Any servicing, repairs, upgrades etc. are a company expense (wholly and exclusively... withstanding).
c) Any other employees / office holders are also entitled to use of a company bicycle, if it's a family business

mmuk

just a note, if you designate your study as your home office, be sure to tell your house insurance company that you run a company from home, or it may invalidate your insurance.

(this happened to a friend of mine ... cost him lots of money!)

MM

samsbike

cheers - but have advised him to stay away from all that. Too much hassle for the effort