Anyone bought a motorbike via a ltd company ?

Prothet_of_Doom

Recently I decided I had a death wish, and want to re-live my youth, by purchasing a moderately sized motorbike.

Now I own a small ltd company and it was pointed out to me that there would be tax advantages if the company bought it and allowed me some private use. I will also use it in the summer months to travel to clients about 100 miles away, mainly to avoid Friday afternoon traffic jams, on the motorway, and tootle home via a more scenic route.

I mentioned this to my long suffering wife and she's reacted a bit like the media to new that David Camerooooon may have benefited legally from a tax avoidance scam.

She's happy with the motorbike plan, but not with the morality of good sensible legal tax planning. Apparently I'm pushing my luck.
I've read the HMRC guidance on line and can't see an issue with it.
Insurance quotes including class one business use are about £30 more.

Anyone actually done this themselves ? I've heard anecdotes, but never met anyone that has done this.

paddyrg

It's not really about if anyone else has done it, it's about whether HMRC believe your arguments that it's legit. A few clients in the summer doesn't sound terribly convincing, and for personal use (the other 9 months?!) would need to be incidental or rented to you at market rates, or you'll really draw a close eye of they check up.

Will they check up on you? Who knows?! If they did could you honestly convince them that it's a reasonable business purchase and not a masked personal one? What someone else did is irrelevant - they may have a courier company, for instance.

paddyrg

It's not really about if anyone else has done it, it's about whether HMRC believe your arguments that it's legit. A few clients in the summer doesn't sound terribly convincing, and for personal use (the other 9 months?!) would need to be incidental or rented to you at market rates, or you'll really draw a close eye of they check up.

Will they check up on you? Who knows?! If they did could you honestly convince them that it's a reasonable business purchase and not a masked personal one? What someone else did is irrelevant - they may have a courier company, for instance.

Pennywise

Irrelevant how much it's used for business. The company can buy it as a legitimate expense and claim corporation tax relief on it.

BUT, if there is ANY personal use at all, then it's a taxable benefit in kind on you, based on 20% p.a. on it's full purchase price and it's running costs (if also paid by the company), meaning you pay income tax (and the company pays NIC) on 20% of it's purchase price and costs every year.

So, over 3/4 years, you'll have paid at least as much personal tax on it as the company saved. So, at best, putting it through the company gives you a timing advantage, but overall, likely to cost more than it saves.

Prothet_of_Doom

Thank you Pennywise.
Always good to have a timing advantage.

paddyrg

Prothet_of_Doom wrote: »

Thank you Pennywise.
Always good to have a timing advantage.

Yes, maybe, but... You can get a timing advantage via a personal loan as well, it may be substantially cheaper and you'll own the bike at the end of it.

Annisele

Presumably there'll also be an insurance implication?

If your company owns it, then I suspect that at least the fire and theft part of the insurance will have to be in your company's name (because you won't personally have an insurable interest). I've no idea how much that would cost compared with a personal policy, but it's worth checking.

Prothet_of_Doom

Annisele wrote: »

Presumably there'll also be an insurance implication?

If your company owns it, then I suspect that at least the fire and theft part of the insurance will have to be in your company's name (because you won't personally have an insurable interest). I've no idea how much that would cost compared with a personal policy, but it's worth checking.

The quotes did not change, class one business use. Not to be used as a courier service, and only for travel to and from client and social and domestic and commuting. (like a company car)