Tax benefits of company motorbikes
Choosing a company motorcycle will mean that the benefit in kind values are generally lower than if a company car had been chosen, and as such they will attract lower additional tax charges.
For a company, there is no higher tax limit on what can be claimed in the company’s tax calculation, and all the cost of the motorbike qualifies for capital allowances. Also, all the VAT may be reclaimed on the purchase of a company motorbike (even under the flat rate scheme, as long as the bike is purchased outright rather than leasing or hire-purchase). However, it is worth noting that VAT will have to be charged on the motorbike when it is re-sold.
Please note that the invoice must be in the company name, the motorbike should be under the company’s ownership (i.e. the log book in the company’s name) and you will need a business insurance policy.
How does it affect the employee?
The employee is taxed as receiving a benefit in kind and will pay tax at their highest rate on the benefit in kind value.
The benefit in kind value of the motorbike is calculated as 20% of the total purchase cost (including VAT) of the brand-new list price motorbike each year (or part thereof) that the motorbike is made available.
If the running costs (insurance, maintenance etc) of the motorbike are paid by the company, there is an additional benefit in kind each year (or part thereof) of 20% of these annual costs.
Fuel would need to be carefully apportioned, with the private element reimbursed to the company (or purchased personally, and only the business element expensed). We would recommend keeping detailed mileage records as back up.
How does it affect the employer?
The company would also pay Class 1A NIC at 13.8% for 2024-25 on this benefit amount as declared on the P11D(b) and this is payable by 22nd July after the end of the tax year.