GUeSt ArtiCLe

Can I save money by buying an e-bike

through my company?

Business owners often ask us if they can purchase their e-bike through their company. The good news is you can and there are a couple of ways to do it which offer some great tax savings.

Company purchase

The easiest way is for the business to purchase your e-bike directly. You simply need a VAT invoice from us in your company’s name. This will allow you to reclaim the VAT and reduce your corporation tax liability too. For example, buying a £6,000 bike, you can reclaim £1,000 of VAT and another £950 of corporation tax using your capital allowances annual investment allowance.

Cycle to work schemes

The cycle to work scheme is designed to encourage companies to lend bikes to employees as a tax-free benefit. Company directors can benefit from this scheme too, even if the director is the sole employee.

There is no taxable Benefit In Kind (BIK) incurred, so there is no need for any reduction in salary to offset the bike’s cost. Directors can also potentially save on income tax, as the bike is being funded by income earned before tax and national insurance, meaning they could save between 20-45%, depending on their salary.

HMrC rules

HMRC states that the bike should mainly be used for work, meaning at least 50% of the mileage on the bike is workrelated. HMRC does not require the bike user to keep a mileage log, nor do they require employers to monitor employees’ usage. However, if the bike is mainly used for leisure, then BIK charges will apply.

The bike must remain owned by the company and ownership should not be transferred to the employee during the period of the loan. As the company retains ownership of the bike, it’s important to remember that the cost of any repairs remains the responsibility of the company.

Mileage allowances

One final thing worth noting is that it is possible to claim mileage for bikes that are personally owned but still used for journeys to and from a temporary workplace, HMRC allows a cyclist to claim 20p per mile for business journeys.

But that’s not the only benefit of using a bike. Cycling an extra five miles to work and back every week on an e-bike will burn calories and reduce your carbon footprint. These environmental and health benefits, combined with the generous tax breaks available, make it well worth thinking about swapping your car for a bike to get to work or travelling between meetings!

If you’re thinking about buying an e-bike through your company, please get in touch to arrange a test ride on 01453 834300 or info@edemo.bike. www.edemo.bike