Company ebikes?

[eTim]

Does anyone know what the taxable or asset status of an ebike is when being provided to an employee for transport? Or what the official definition of an ebike is when asking an accountant/tax advisor about it's taxable or asset status?

I mean this when comparing and ebike to other forms of transport such as a company car that is a taxable benefit based on CO2 emissions and value and sits in it's own tax class, a company motorbike is also taxable but at a much lower rate and is classed as plant and machinery (I think). Is there such a thing as a company ebike?

Forget the bike to work scheme, if an employee is using a bike to commute between different places of work and an ebike is provided to them that costs way over the £1000 limit (cue comment on rising prices). But the employee also uses the bike to travel between different clients, therefore needs the panniers, a sturdy bike, maybe a couple of extra batteries, even a trailer etc so that it's use could be comparable with a car or motorbike. For the employer could this be classed as a company ebike and therefore written down against company profits? Which tax class would it fall under? And what benefit would it be to the employee?

 

[Patrick]

Forget the bike to work scheme, if an employee is using a bike to commute between different places of work and an ebike is provided to them that costs way over the £1000 limit (cue comment on rising prices). But the employee also uses the bike to travel between different clients, therefore needs the panniers, a sturdy bike, maybe a couple of extra batteries, even a trailer etc so that it's use could be comparable with a car or motorbike. For the employer could this be classed as a company ebike and therefore written down against company profits? Which tax class would it fall under? And what benefit would it be to the employee?

I wouldn't be so quick to dismiss the Cycle-to-work scheme for this, if the company isn't trying to recover the cost of the bikes from the employee then the £1000 limit doesn't come into it (that limit's associated with the consumer credit license needed for a salary sacrifice), and the journeys you describe would still be qualifying journeys for the purposes of the scheme. In fact the scheme makes much more sense if the employing isn't trying to buy the bike (which technically they can't do under the scheme).

Here's the relevant cycle-to-work deductibility info from the DfT.

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5.3 Deductibility for the employer

Employers who purchase cycles and cyclists’ safety equipment for loan to their employees will be able to treat the cost as capital expenditure and claim capital allowances in the normal manner.

For most businesses expenditure on cycles and cyclists’ safety equipment will qualify for the Annual Investment Allowance (AIA). The AIA allows businesses to write off 100 per cent of qualifying capital expenditure up to £50,000 each year against the businesses’ taxable profits.

Where the AIA is not available or the total capital expenditure on plant and machinery exceeds the annual limit, expenditure on cycles and cyclists’ safety equipment can be added to the main capital allowances pool and qualify for writing down allowances at 20 per cent per annum.

For example:

● Cost of cycle in year 1 = £500
● Amount of capital allowance due in year 1 is £500 x 20% = £100
● Amount of capital allowance due in year 2 is £400 x 20% = £80
● And so on at 20% per year on the reducing balance.

For expenditure incurred in the year 2009-2010 all businesses can claim the temporary 40% first year allowance (FYA) on their spending on most plant and machinery, which can include cycles and cyclists’ safety equipment, for any expenditure not covered by the AIA.

For example:

● Cost of cycle in year 1 = £500
● Amount of FYA due in year 1 is £500 x 40% = £200
● Amount of capital allowance due in year 2 is £300 x 20% = £60
● And so on at 20% per year on the reducing balance.

From the employers point of view as long as it is a business asset the employer can continue to claim capital allowances until the whole cost has been written off regardless of how long it is used in the cycle scheme.

More details on plant and machinery capital allowances can be found here

HM Revenue & Customs: Capital allowances and Corporation Tax

Where the cycles and cyclists’ safety equipment is leased, the leasing costs will generally be deductible as an expense in computing the business profits. Your auditors or tax advisors will be able to determine the specific accounting treatment and calculate the tax deduction available. Please note those organisations that do not currently pay tax (e.g. public sector employers) will not be able to claim a deduction (see Section 7 for VAT treatment).
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http://www.dft.gov.uk/pgr/sustainable/cycling/cycletoworkguidance/pdf/518054/

 

[Herb]

Don’t worry about the cost of the bike

Concentrate on the Breakfasts

" Employers can provide a tax-free breakfast to cyclists six days per year, to encourage people to try cycling to work. "


Tax Incentives


My accountant tells me he believes this has now been relaxed to unlimited breakfasts.

Herb

 

[eTim]

Patrick,

Thanks for posting the info. In the case of a one-man Ltd company, I'm not sure that the Bike to work scheme has much value (TBH I've not looked into it that much). However I do understand the value of 100% write down of capital assets in the first year, plus the initial VAT saving, this could lower the effective purchase price of a bike significantly.

Now tax free breakfasts sounds like a good deal.

Tim.

 

[Barnowl]

Off thread but I have to say that Supersix is a real beauty. Just shown the pic to a colleague and cyclist who couldn't tell it was an e-bike.
Did it come with the 175rpm motor?

 

[eTim]

Off thread but I have to say that Supersix is a real beauty. Just shown the pic to a colleague and cyclist who couldn't tell it was an e-bike.
Did it come with the 175rpm motor?

Yes it's got the 175 motor fitted, Ive got to try the 190 motor from my Synapse on it yet.

Cheers.

 

[Dynamic Position]

Forget the bike to work scheme, if an employee is using a bike to commute between different places of work and an ebike is provided to them that costs way over the £1000 limit (cue comment on rising prices). But the employee also uses the bike to travel between different clients, therefore needs the panniers, a sturdy bike, maybe a couple of extra batteries, even a trailer etc so that it's use could be comparable with a car or motorbike. For the employer could this be classed as a company ebike and therefore written down against company profits? Which tax class would it fall under? And what benefit would it be to the employee?

If you commute between different places of work, you should be able to claim for a mileage allowance for these journeys. Travelling between home and the first place of work and the return commute does not count!
I don't know how many private employers do this, but a mileage payment used to be an option in the public sector.
At 30p a mile an e-bike would be pay for itself in no time
Its thought to think what politicians can claim.

 

[eTim]

If you commute between different places of work, you should be able to claim for a mileage allowance for these journeys. Travelling between home and the first place of work and the return commute does not count!

That is true for employees. As a contract worker you are subject to the 24 month rule and could claim 20p/mile for travel to a workplace for up to 24 months at the same workplace (subject to other conditions not worth going into here).