Buying a bike through your Limited Company

Looking to avoid public transport, reduce your carbon footprint or simply get fit on the commute to the office and between meetings then look no further than our latest blog offering advice on buying a bike through your Limited Company.

How to purchase your bicycle?

You, as the employer, can purchase a bicycle through your Limited Company for the use of an employee. The cost of a bicycle and associated safety and security equipment will be allowable against company taxable profits and any VAT can be reclaimed, and should the below conditions be met it will also qualify as a tax-free benefit to the employee.

  • An employee should use the bicycle mainly for commuting to and, if relevant, between workplaces. At least 50% of the bicycle’s use should be for work purposes.
  • Ownership of the bike must remain with the company through the loan period.

However, the bicycle can also be used for non-work purposes and there is no need for employers to monitor individual usage and there is no requirement for employees to keep a mileage log.

If the bike is transferred to an employee income tax will be due, calculated on the market value at the date of transfer.  The company will pay corporation tax on, assuming 100% relief was given in the year of purchase, the lower of cost and disposal value.

Is this available to other employees?

Sure, for other employees it’s known as the ‘Cycle to Work Scheme’. An agreement would need to be entered into setting out the details of the loan. As long as the total cost of the bike and equipment is below £1,000, it will fall under a group consumer credit licence, rather than setting up a Consumer Credit License. The monthly repayments of the loan are made by the employee via salary sacrifice for the agreed period until the loan is fulfilled. The tax treatment for the company and individual remains the same.

Can I claim mileage for using my bike?

If an employee uses a bicycle they purchased personally, they will be able to claim for 20p per business mile.

Need more advice?

If you require any more information or have any questions regarding purchasing a bicycle through your Limited Company, please call our Limited Company team on 0800 288 9022 or email info@icsuk.com.