Sole trader - bike as a tax write-off?!?

Hello,

I'm a sole trader and cycle to my office on a beater that is slowly giving up the ghost and needs replacing. I also fancy a nice shiny new carbon steed. Can I combine these two needs and get some sort of tax benefit? I would happily ride the new carbon to work every day as I can bring it into my office.

I read this from a bike shop website after figuring out I cannot setup the cycle to work scheme for my company:

You can still make savings however, if you intend to use a bicycle for work-related journeys. You would purchase the bike from Edinburgh Bicycle in the normal way (with a company credit card, cash or by making a BACS payment) then claim back capital allowances and write the purchase off against tax. If you are VAT registered you may also be able to reclaim the VAT. To do either of these you will require an invoice from Edinburgh Bicycle addressed to your company and we can supply this to you if you complete the Small Employer application form.

And also this page:

http://www.hmrc.gov.uk/capital-allowances/plant.htm

But it doesn't really give me an answer suitable for my tiny dunce mind. If I buy a new bike and ride it to work, what can I claim back from it on my tax return? Can any tax/business heads break this down for me please? I'm not VAT registered, FYI.

Cheers

Of course you can.

It's a travel expense.

So I can claim the entire value of the bike against my profits? Seems too good to be true...

Of course you can.

It's a travel expense.

Seems too good to be true...

Yeah I was thinking that.

What if you were to buy a car? Would that be classed as a travel expense?

That's what the HMRC site details - it would need to be a work van and then it's comes under this capital allowances stuff that I don't understand!

Yeah I was thinking that.

What if you were to buy a car? Would that be classed as a travel expense?

My wife is a sole trader.

We inherited a car from her mum (which she uses for business) and even though it isn't registered as a business vehicle our accountant encourages us to claim for all petrol, tax, insurance and MOT.

Travelling to work is not a work related expense and is not reclaimable in any form - though cycling on business is. What you should however consider is the Cycle to Work Scheme.

^^ Uses on business yes, getting to work, no.

I don't have a regular salary, I pay myself in lump sums as and when I can, so the scheme is out for me. Every meeting I go to and every time I need to get supplies I'd be using the bike though, so would it be eligible?

Travelling to work is not a work related expense and is not reclaimable in any form - though cycling on business is. What you should however consider is the Cycle to Work Scheme.

Have your registered office as your home address (and enjoy the % tax relief on your rent/mortgage) then the desk space you have elsewhere is for "meetings" only.

Not cycling to work.
Cycling to a meeting.

I like your style. Can I also claim my desk space too? If so, that could work!

Have your registered office as your home address (and enjoy the % tax relief on your rent/mortgage) then the desk space you have elsewhere is for "meetings" only.

Not cycling to work.
Cycling to a meeting.

I'm not too sure on the bike purchase thing, but my accountant asks for my mileage as you can claim a certain amount per mile. I must ask about the purchase of a new bike though.

It counts as your usual place of work, not the registered place of business.

Cycle to Work despite the highjacking by Scheme Providors does not need regular repayment schemes and like any salary sacrifice scheme can be paid off in lumps. I'd suggest running the scheme through your own books, and that way you get the maximum benefits of it.

Yes you can reclaim travel on business expenses - HMRC even have a set rate for cycling miles. I'd suggest that you sit down with your accountant and have a chat about this.

I spoke to a book-keeper about this a couple years ago and her opinion was that I could claim a percentage of the bike's value. Just an opinion though, she wasn't a full accountant and had never looked into bike specifics in terms of tax before.

If anyone has a definitive answer it would be useful for plenty of forumongers I expect.

I'm not too sure on the bike purchase thing, but my accountant asks for my mileage as you can claim a certain amount per mile. I must ask about the purchase of a new bike though.

you can only claim the full cost of bike if it's only used for work. If a third of the use is work, offset a third of it's value.

Your bike would not qualify as a capital item (and therefore not capital allowances) unless it was used for work purposes, eg:

http://www.cargobikehandyman.co.uk/

I'm not too sure on the bike purchase thing, but my accountant asks for my mileage as you can claim a certain amount per mile. I must ask about the purchase of a new bike though.

Bike bought for cycle to work scheme. Actually there is no requirement for you to pay for it as a sole trader, but you might wish to do this as part of how you take money out of the business (applies to those who have limited companies typically). If you leave it in the business then you can get capital allowances on it (though if I recall VAT on the purchase is no longer reclaimable - buy second hand and don't worry about this anyway).

Your private use (commuting) of the bike is a taxable benefit, in the same way that your private use of a business car would be, except that the benefit rate has been set to nil, unlike any other private use of business assets.

Ultimately, a lot of this comes down to how honest you want to be with your tax affairs. I've seen sole traders buy bikes, parts, clothing, accessories etc on the business then write it off against profits and have never been challenged by the taxman. Equally I've seen those that only claim the mileage.

I think, strictly speaking, you can't deduct a bike against profits as a sole trader unless that bike is equipement for your business. But mileage, cycle to work, etc should all be taken advantage of in my opinion, as it's cash you're entitled to.

But mileage, cycle to work, etc should all be taken advantage of in my opinion, as it's cash you're entitled to.

no. you can't claim to work only for work.
think in terms of when you can claim back a train ticket, use same principle.

My bad, you're right:

http://www.hmrc.gov.uk/rates/travel.htm

'Business mile' only...

my accountant advised me to claim a third of bike cost and a third of anything spent running/maintaing the bike... it's based on much of my week is freelance work (obviously a third) verses going to a PAYE job. This is much easier to work out.

This is getting complicated. I think I really need to speak to an accountant don't I!

This is getting complicated. I think I really need to speak to an accountant don't I!

it's quite easy, i did it myself for years. I only have an accountant now as it's cheaper than my time spent doing it.

So if I'm using the bike on a daily basis for meetings etc 5 days a week, and riding it 1-2 days over the weekend for fun, does claiming a 3rd of it still make sense?

my accountant advised me to claim a third of bike cost and a third of anything spent running/maintaing the bike... it's based on much of my week is freelance work (obviously a third) verses going to a PAYE job. This is much easier to work out.

I met a chap who claimed his motorcycle as plant machinery so fuel, repairs and everything are write-offable or other tax wordy type stuff.

All legal

No help to you mind