The tax deductable motorbike and scooter … if you’re self employed

The tax deductable motorbike and scooter … if you’re self employed


The tax deductable motorbike and

scooter … if you're self employed

A change in the March budget means you can offset the price of a scooter or motorbikSe0



The purchase price of a scooter can be completely offset against tax. Photograph: Getty Images

A change hidden deep in the pages of the budget in March means that it is now possible for the self-employed to completely offset the purchase price of a new scooter or motorbike against their income for tax purposes.

Get On, a campaign group set up by motorbike and scooter manufacturers to promote two-wheeled travel, says it has identified a change to the Finance Act which means self-employed riders buying a bike solely for business use can deduct 100% of its cost from their taxable profits by claiming it as an annual investment on their tax return.

The group says the change in the law means those who pay 40% tax could save £2,728 on the cost of a new £6,821 Honda CBF1000.

At the other end of the scale, commuters who only want a 50cc bike can find ones starting at £499 at Direct Bikes. By writing off the cost against tax, the bill is in effect reduced to £400 for a lower-rate taxpayer and £300 for a higher-rate one.

The move will particularly appeal to self-employed workers who want to buy a scooter or motorbike to travel to clients – particularly in London, where two-wheeled transport escapes the £8-a-day congestion charge.

Get On has started offering first-timers a one-hour taster session. The sessions, run by local training instructors, are free and designed to give users a go at riding a bike, without committing to getting their compulsory basic training certificate. The trainer will supply you with a helmet and safety equipment.

John Shaw, of Chartered Accountants Bentleys of Bolton, says of the new tax break: "Motorcycles are no longer treated for tax purposes like cars but as plant and equipment. This has a significant effect on the amount of tax relief you can claim when you buy a motorcycle for use in your business.

"Company cars are limited to a 20% or 10% annual tax write-down unless they have a carbon footprint emitting below 110g of CO2/km – in which case you may qualify for a 100% allowance. The same criteria no longer apply to motorcycles. Whatever their CO2 emission, 100% of the cost is potentially available as a tax write-off in the year of purchase."

Sean Byrne, tax consultant for accounting firm Haslers, says the rules apply only to motorcycles purchased after 6 April, 2009. "Total capital allowances must be within £50,000 in order to claim."

Meanwhile, Mike Warburton, chartered accountant Grant Thornton's lead expert on personal taxation, says the change will give the so-called baby boomers a chance to re-live their childhood.

"The new rules allow bikes to be treated as plant so that, in most cases, business owners will be able to claim the whole cost against tax at their top tax rate. So you can enjoy the freedom of the open road and know that the tax man is subsidising you."

In recent years the number of workers – employed, as well as self-employed – using bikes and scooters to commute to work, has risen dramatically. The high cost of peak-time public transport, increased congestion, and the prospect of free parking, has meant increasing numbers have been swapping the tube or bus for a bike or scooter.

When it comes to buying, you can pay as much as you want. The cheapest models we could find are around £500-£600, made in China or India, with brand names most people won't recognise.

A Piaggio Zip 50 costs around £1,100, while the Piaggio Fly with a 125cc engine will set you back just under £2,000. A more swish 400cc Xevo costs £4,399. The Honda CBF125 costs around £2,300. Plenty of small scooters will do over 100 miles per gallon. Road tax is £15 a year.

One thing to factor in the cost of purchasing a scooter or motorbike is insurance, which will typically set back a 40-year-old rider £250-£300 a year for comprehensive cover or £150 for third party, fire and theft cover.

Dealers often offer a discounted first year's insurance cover with a new bike – typically £99 a year.


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