Bike to work for the self-employed

cormpat

I know this has probably been asked before, but I couldn't find anything on the wiki about it, but if you're self employed can you avail of the bike to work scheme?

Dubba

As far as I know the scheme for employees only.

Here's a good link for info:

http://www.cyclesuperstore.ie/shop/pc/bike2work.asp

cdaly_

As I understand it, if you have set yourself up as a company and pay yourself a salary, then you can use the scheme. OTOH, if you're just taxed as 'sole trader' or equivalent, then you can't.

Beasty

It's only available to PAYE employees/directors.

Side Show Bob

cormpat wrote: »

I know this has probably been asked before, but I couldn't find anything on the wiki about it, but if you're self employed can you avail of the bike to work scheme?

If you are self employed you can reclaim the VAT if you have a VAT number, and you use the bike for work, and it is much easier

cormpat

Beasty wrote: »

It's only available to PAYE employees/directors.

I am a company director so happy days!

Possedion

my accountant seems to think its ok, also am director of own company.
but pay myself a salary etc.! Either that or I now owe my company 1 carbon focus bike!!

cormpat

Possedion wrote: »

my accountant seems to think its ok, also am director of own company.
but pay myself a salary etc.! Either that or I now owe my company 1 carbon focus bike!!

Hey, if it's your company you can owe it what you like!

Undercover Elephant

Side Show Bob wrote: »

If you are self employed you can reclaim the VAT if you have a VAT number, and you use the bike for work, and it is much easier

I'm not an accountant but ... I think you need to be careful with this. AFAIK you can only reclaim the VAT if the bike is being used for the purpose of making taxable supplies. If you are using it for commuting to your normal place of work, that won't count.

That's why the companies who are in the scheme can't themselves reclaim the VAT when they buy a bike for an employee.

Lumen

As I understand it, regardless of your employment status your employer can buy you a bike for commuting, providing that the bike is used for nothing else. Not a single weekend spin, trip to the shops, cheeky interval session.

If you are self-employed in the strict non-PAYE sense then you cannot avail of the bike to work scheme.

If you are employed in the strict PAYE sense then you can avail of the scheme.

Beasty will no doubt correct me.

Beasty

Just to clarify a couple of things:

Commuting is not business travel - if the company buys a bike for commuting it is a taxable benefit in kind (unless then sold to the employee under the BTW scheme).

If they buy it for your work exclusively (eg courier) it is not a benefit. However if you then use it for non-work travel (including commuting) an element of the cost would be a taxable benefit

Similarly on the VAT point - the business can reclaim the full VAT if the bike is used exclusively for work (but no commuting), assuming they are VAT registered

I would need to get the text books out to confirm, but I'm pretty sure that if there is any private usage then part of the VAT cannot be reclaimed EDIT - see my post below - I think the VAT can be reclaimed where there is a taxable benefit (except for motor vehicles)

For someone who is self-employed using a bike exclusively in their work (eg a courier), I suspect the chances of them being VAT registered are quite low. IIRC the registration threshhold is annual sales of €70k.

Side Show Bob

Undercover Elephant wrote: »

I'm not an accountant but ... I think you need to be careful with this. AFAIK you can only reclaim the VAT if the bike is being used for the purpose of making taxable supplies. If you are using it for commuting to your normal place of work, that won't count.

That's why the companies who are in the scheme can't themselves reclaim the VAT when they buy a bike for an employee.

My understanding there is only BIK on a car, not on a van, motorcycle or a bike, and that VAT is fully refundable

Beasty

Side Show Bob wrote: »

My understanding there is only BIK on a car, not on a van, motorcycle or a bike, and that VAT is fully refundable

This is not correct - if there is any private use of a company asset there is, on the face of it, a taxable benefit (unless there is a specific exemption, such as the BTW scheme). The only difference with cars is there is a special method of valuing the benefit.

On the VAT side, again special rules apply to motor vehicles (which includes motorcycles), and no VAT may be reclaimed. In the case of the other assets you mention, if there is private use, I think it is possible to claim the VAT back if the employee is chargeable under the Benefit in Kind rules

Side Show Bob

Beasty wrote: »

This is not correct - if there is any private use of a company asset there is, on the face of it, a taxable benefit (unless there is a specific exemption, such as the BTW scheme). The only difference with cars is there is a special method of valuing the benefit.

On the VAT side, again special rules apply to motor vehicles (which includes motorcycles), and no VAT may be reclaimed. In the case of the other assets you mention, if there is private use, I think it is possible to claim the VAT back if the employee is chargeable under the Benefit in Kind rules

Not sure that I agree with you, there is no BIK on my small van that’s why I have a van, I can use it weekends and for travel to and from work, it remains a company asset, the company write it down over 3 years pluss VAT is fully reclaimable. This came in in 1987.

The bike too would remain a company asset, however it would be used by the company owner, and would fall into the same rules as a non passanger vehicle

kennyb3

Side Show Bob wrote: »

My understanding there is only BIK on a car, not on a van, motorcycle or a bike, and that VAT is fully refundable

I know there is BIK on vans for private use - 5% of OMV

RobFowl

From my limited knowledge am with Beasty and Kennyb3 on this one. Suspect they know more than the average bear about this sort of thing as well.....

Personally am self employed in a partnership so miss out on that basis, am also a company director but in an unpaid capacity so lose out again and finally am also employed but by an agency which does not operate the bike to work scheme. (so have to make do with the 4 I already underuse....)

Toblerone1978

Side Show Bob wrote: »

Not sure that I agree with you, there is no BIK on my small van that’s why I have a van, I can use it weekends and for travel to and from work, it remains a company asset, the company write it down over 3 years pluss VAT is fully reclaimable. This came in in 1987.

1987 - there has been at least 24 Finance Acts since then! I believe kennyB3 and Beasty are correct on this one, perhaps there should be BIK. Also, vans are now written-down over 8 years for tax purposes.

Beasty wrote: »

For someone who is self-employed using a bike exclusively in their work (eg a courier), I suspect the chances of them being VAT registered are quite low. IIRC the registration threshhold is annual sales of €70k.

The threshold may also be €37.5k for services provided (such as a courier service). €70k relates to the provision of goods rather than services (e.g. you use your bike to deliver cakes than you sell to the local offices!).

kennyb3

RobFowl wrote: »

From my limited knowledge am with Beasty and Kennyb3 on this one. Suspect they know more than the average bear about this sort of thing as well.....

Personally am self employed in a partnership so miss out on that basis, am also a company director but in an unpaid capacity so lose out again and finally am also employed but by an agency which does not operate the bike to work scheme. (so have to make do with the 4 I already underuse....)

The self employed really do get screwed in this country. Im soon to join those ranks as a partner in my firm and im not looking forward to all the extra tax penalties it brings

Lumen

kennyb3 wrote: »

The self employed really do get screwed in this country. I'm soon to join those ranks as a partner in my firm and im not looking forward to all the extra tax penalties it brings

If you want the "benefits" of being a PAYE worker, go on PAYE. Simples.

Side Show Bob

The OP states self employed, so not subject to 5% of value, also straight line depreciation does not have to be as long as 8 years, it depends on the circumstances of individual and differs with accountancy practices.

A bike within reason, in most cases falls well below all thresholds, and probably should not be used for personal use, but...

kennyb3

Side Show Bob wrote: »

The OP states self employed, so not subject to 5% of value, also straight line depreciation does not have to be as long as 8 years, it depends on the circumstances of individual and differs with accountancy practices.

A bike within reason, in most cases falls well below all thresholds, and probably should not be used for personal use, but...

Yep no 5% BIK for self employed but there will be a tax add back for private use (normally anywhere from 5% to 20% obviously depending on level of private use).

This will apply to all costs including wear & tear. As you ve stated depreciation can be at any rate (should be the useful economic life of the asset) but for tax purposes depr is added back and W&T is over 8 years.

Toblerone1978

kennyb3 wrote: »

The self employed really do get screwed in this country. Im soon to join those ranks as a partner in my firm and im not looking forward to all the extra tax penalties it brings

Is the extra tax penalties because of the extra pay!!

But you're right, I agree, self employed get a harsh deal compare to PAYE workers.

N1977

cormpat wrote: »

Hey, if it's your company you can owe it what you like!

[Takes off cycling hat and puts on "tax" hat]

I'd be very careful with this. The Revenue are increasingly focusing on directors who have borrowed from their companies as it gives rise to withholding tax and PAYE/PRSI issues (i.e. it's an interest free loan and BIK is due on the deemed interest rate which is currently 12.5%).

kennyb3

N1977 wrote: »

[Takes off cycling hat and puts on "tax" hat]

I'd be very careful with this. The Revenue are increasingly focusing on directors who have borrowed from their companies as it gives rise to withholding tax and PAYE/PRSI issues (i.e. it's an interest free loan and BIK is due on the deemed interest rate which is currently 12.5%).

You are making alot of assumptions there, most noteably that the directors loan account is in debit and also that it is a close company.

Beasty

We have a taxation forum where posters can discuss loans to directors and other non-cycling related tax matters. Let's stick to the BTW scheme here

Thanks

Beasty

cormpat

So just to confirm; as a Director of a Company which I have a share holding in I am entitled to purchase a bike under the bike to work scheme when I choose to do so?

Beasty

cormpat wrote: »

So just to confirm; as a Director of a Company which I have a share holding in I am entitled to purchase a bike under the bike to work scheme when I choose to do so?

Provided your "scheme" is open to all employees and directors, yes

cormpat

Beasty wrote: »

Provided your "scheme" is open to all employees and directors, yes

It' certainly would be. A massive 2 of us.

sarenka

Beasty wrote: »

For someone who is self-employed using a bike exclusively in their work (eg a courier), I suspect the chances of them being VAT registered are quite low. IIRC the registration threshhold is annual sales of €70k.

Just to clarify - you can voluntary register for VAT even if well below the stated thresholds, €37,500 for the supply of services, and €75,000 for the supply of goods.