[Closed] Stw accountants, self employed bike purchase.

If you ever get challenged by HMRC they will ask you for a breakdown of what percentage the bike is used for business and what for pleasure.

surely no-one actually enjoys riding their bikes?

It probably depends on how comfortable you are with it if it's a swindle (which your situation may not be, IANAA). When I worked in a bike shop the owner of the local chippy got a Trek Madone through the business. It wasn't used for delivering fish suppers...

I've seen various websites (accountancy firms, etc) claiming that you can claim travel expenses of 20p per mile for bicycle journeys relevant to your business (i.e, to clients, bank, post office, etc NOT commuting) although I cannot actually find this on the HMRC website (specifically concerning the self-employed) to confirm.

Alternatively,

You can claim a bicycle as a business expense on your taxes providing it is only used for that business. You would do this by claiming it as capital expenditure, though please be aware that if you opt to go down this route, you would not be able to claim to the flat rate mileage expense for travelling by bike.

There is no "middle ground" AFAIK where you can claim a percentage cost of the purchase price/maintenance if it is used partly for business & partly for recreation. (IANAA)

I'm sure your dodgy accountant can bury it in the books somewhere though! 🙂

You can set up your Cycle to Work scheme whatever way you want, providing it is available to all your employees. This means that you don't necessarily have to pay any BIK or salary sacrifice for the bike at all, but you might have to facilitate a similar set-up for an employee.

I put the whole bike through. (£1300 fixed road bike) but I could justify it as it was only used to get to different places of work (not a commute to the same place everyday) and I had other more expensive bikes for leisure.
This was a few years ago and I'm about to put a Brompton through the business too as that is more use to me now, I buy a chain/tyres/brake pads through the business too.
I'm not trying to con the tax-man as my use/need is genuine and I very rarely use it for pleasure.

You can set up your Cycle to Work scheme whatever way you want, providing it is available to all your employees.

You can set up your Cycle to Work scheme whatever way you want, providing it is available to all your employees.
OP wants a bike for himself, though

Yes you can still do that.

I don't think that's the case for the self-employed, although happy to be proven wrong with a link to a relevant web page (as I would like to do it too!)

[url= https://www.gov.uk/government/publications/cycle-to-work-scheme-implementation-guidance ]Government Guidlines[/url]

A lot of the advice that gets given on here is based on confusion between the government guidelines and the restrictions put in place by the official scheme providers. The schemes also do their best to make sure that it all sounds too confusing to do it on your own.

Add in the fact that most accountants don't understand the distinction between the government guidelines and the scheme guidelines, and there are a lot of confused people around.

I have set up a cycle to work scheme but all our ladies are 60 plus and not keen on bikes.
Should I make a bike available just in case they want to give it a go?

Should I make a bike available just in case they want to give it a go?

There would need to be a 'company bike'*, made available for use on company business. Like the one you are proposing to purchase.
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*smutty minds out the gutter you.

No you don't need to go that far just let them know the option is there to sort something out for them, if they want to be a bit more active etc.

HMRC will go from is it wholly and exclusively for business use. If no then disallow the percentage that isn't on you capital allowances and running costs.
Next problem is the £3000 carbon, light as a feather road bike wholly and exlusively for business use compared to a Halfords special. Probably not. Safety equipment, lights etc you probably get away with easier than an expensive bike.

HMRC will go from is it wholly and exclusively for business use. If no then disallow the percentage that isn't on you capital allowances and running costs.
Next problem is the £3000 carbon, light as a feather road bike wholly and exlusively for business use compared to a Halfords special. Probably not. Safety equipment, lights etc you probably get away with easier than an expensive bike.

That kind of treatment of an asset doesn't apply with Cycle to Work.

The next problem isn't a problem because it doesn't apply to bikes under Cycle to Work, but you are entitled to spend whatever you want in your business as long as it is treated properly in the books.

you are entitled to spend whatever you want in your business as long as it is treated properly in the books.

Not if you're truly self employed you're not.

If you run your business through a limited company you may well be able to put whatever you want through your books (but be careful of creating too large tax losses or trading whilst insolvent etc), but if you are self employed then expenses need to be wholly, exclusively and necessarily for the purposes of your trade (used to be s.111 of the Income Taxes Act if I remember correctly).

Pay yourself a bonus and by the bike with the bonus. Then it's yours.

Sorry that is correct, I have a limited company so I'm not used to the distinctions with sole traders etc.

Plus once you've put ridiculous costs through your books as a limited company, you then need to look at your relationship between you (as an employee of the company you own) and the company, and whether in fact what you are giving yourself is a benefit in kind (which may well be taxable).

So you buy a car through the limited company. It them appears on your P11D as a taxable benefit in kind. You pay your petrol costs - as an employee you receive it tax free only if it passes the wholly and exclusively test. The company buys a holiday for the director / shareholder. Potential for ultra vires transactions or wrongful trading.

A good local accountant will point you in the right direct and make sure you don't store up potential tax liabilities, or worse penalties and convictions in the future.

And whilst the rest of us have to pay our due share of tax, don't expect too much sympathy when tax dodging activities get you in hot water...;

(edit - I think it is s.198 not s.111 of the Act I was thinking of, but that's now repealed and there's a new clause saying the same thing)

Sorry that is correct, I have a limited company so I'm not used to the distinctions with sole traders etc.

Yes yes, I'm a chartered accountant, no need for the high horse routine.

disappointing, was hoping someone finally had a solution for OP's annual "how can I get the taxman to buy me a bike" thread

The tax man won't buy you a bike.

If you set up a limited company and buy bikes for you and your staff, following the government guidelines, the only thing you need to worry about is being admonished by the professional argumenteers/amateur tax collectors on here.

I actually wasn't being facetious, I am in the same boat (self employed) so any new info would be gratefully received. The "taxman buying it" gag was because OP doesn't [i]really[/i] want to use it (just) for work 🙂

Sorry zilog. I suppose it is actually a little bit unfair if you can't get the same C2W benefit as a salaried employee,

We are not a limited company.
I do genuinely ride to the bank on my way home. If we drove there we could claim fuel and parking with no problems.

If there is a big proportion of business use it'll come down to what the accountant is prepared to sign off on. They will take into consideration all kinds of things when they decide what is material and what is not so you might be best to talk to the accountant before laying out any money.

This was on the way back after dropping the books off at the accountants.
There's no way I'd get a car up there, it NEEDS to be a Giant Anthem Sx1.
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Yes yes, I'm a chartered accountant, no need for the high horse routine.

For many years I've wondered if there were any accountants on here, first time I've ever seen anyone own up to it.

Zippy, as others have pointed out and you're now aware, cycle to work is available as a salary sacrifice for those operating a PAYE scheme. Even as a sole trader you can do this but as it is subject to Employers NI so it's not really worth it.
As I said in the previous post buy a reasonable priced bike and just disallow the capital allowances for private use. If you bought a £1500 bike and 2/3 was business use. The bike would be entered into the balance sheet as an asset at £1500 but you would only claim £1000 as capital allowances (annual investment allowance). As the bike would be paid out of the business bank account and you could claim 2/3 of the purchase price against your taxable profits. The remaining £500 wouldn't be allowable for tax with its private use so it would cost you tax and Class 4 NI on that amount or approx £145 at 20% tax and 9% NI.
The same applies to the running costs of the bike for maintenance and repairs. Lights and safety wear I would allow fully.
BTW its sod all to do with what your accountant will allow as HMRC can challenge and claim back any underpaid tax plus interest. You can tell your accountant it's 100% business use, they can query this with you and if they still don't believe you can cover themselves by putting a note in the covering letter that accompanies the accounts or within the accounts themselves. Remember it's yourself that signs your tax return and accounts which will have a note in them to the effect it has been produced on the information supplied.
This would be the advice I give my clients which is similar to other accountants I work with now and in the past.

zilog6128 - Member 
I've seen various websites (accountancy firms, etc) claiming that you can claim travel expenses of 20p per mile for bicycle journeys relevant to your business (i.e, to clients, bank, post office, etc NOT commuting) although I cannot actually find this on the HMRC website (specifically concerning the self-employed) to confirm.

https://www.gov.uk/government/publications/rates-and-allowances-travel-mileage-and-fuel-allowances/travel-mileage-and-fuel-rates-and-allowances

The specific to self-employed will mean putting your employee hat on. You can claim it against your business if it's travel to an alternative or temporary place of work, only up to two years or the earliest point you know you'll be working at that place for more than two years.

If you're commuting to your own office that's deemed as permanent, then no. If it's a regular commute to a client's office, then yes, for a bit anyway.

If you're working from home. No, you can't claim for mileage to the shops or around the local roads/trails 😀

BTW its sod all to do with what your accountant will allow as HMRC can challenge and claim back any underpaid tax plus interest.

Most accountants want to get the books to a defensible version of a true and fair view by working with their client and building a long term relationship. It's in nobodies interest to have a note against something like that because it is only going to cause hassle down the line.

Fair play to you for giving some very good advice instead of the usual negativity about buying a bike through a business.

His sectary reckons as I'll be using it to go home on I wouldn't be able to claim all of it.

If there is a big proportion of business use it'll come down to what the accountant is prepared to sign off on.

Isn't a bike the exception to this? The "bike to work" scheme specifically allows a company to 'loan bikes and safety equipment to employees as a tax free benefit". There is no limit to the value of the bike. The bike is *supposed* to be *mainly* used to travel to and from work and home and for journeys related to work. However, I've never heard of any attempt to check this and I'd guess many bikes bought under the scheme get used only for leisure. (that's all based on the guidance linked above).

Personally, following the same principles I'd say a self-employed person should be able to buy a bike in the same way as any other 'tools' and charge them as an expense. It would certainly be worth a discussion with the taxman - i don't see why a self-employed person shouldn't have the same benefits (they pay the same tax)

Quite separate from bike-to-work, if you use your own bike for business travel (ie not commuting) there is an allowable tax free expenses allowance of 20p per mile. If you're self employed you can put that as an expense andy employers can pay this to you in the same way they would pay expenses for car travel.

I don't see why you can't still claim this if your bike was provided under the bike to work scheme - it's intended to encourage bike travel rather than car travel. Under most bike to work schemes you end up buying the bike. You have clothing expenses for cycling over and above the bike and safety equipment. The exception would be if the bike was wholly owned and maintained by the company.

Well he said yes!
At the end of the year we will have to work out how much is shop use and how much private.
Even if we just get the vat back I'll be happy.