Company motorbikes - a two-wheeled tax trap?
- Brian Pusser
- Nov 5, 2025
- 4 min read
5 November 2025
You’ve taken on a youngster as a general assistant for your business. The role includes making local deliveries for which your firm provides a motorbike. This could trigger unexpected tax and NI charges. What steps can you take to avoid them?
Employer-provided assets
The private use by a director or employee of an asset provided by their employer usually results in an income tax charge on a benefit in kind for the individual and a Class 1A NI bill for the employer.
This applies to employer-provided motorbikes. Unlike cars, there are no special rules for working out the taxable amount for motorbikes, instead the amount is calculated using the so-called “residual liability” rules.
Potential tax and NI cost
If you provide a motorbike to an employee which is available for their private use, the benefit in kind and thus the tax and NI liabilities depend on the cost of providing the bike and any running expenses.
The rules say that for every tax year the cost of providing a bike is the greater of:
20% of its value at the time you first provided it as a benefit in kind, or if you didn’t buy the bike but rented or leased it instead
the rent or hire charge you pay.
Example.
The Food Emporium offers a local delivery service. For this purpose two of its staff are each provided with a motorbike. These are leased at £960 per year (inc VAT). The market value of each bike was £4,000 (inc VAT).
They were first made available to the employees three months after purchase when they were each worth £3,600.
The taxable amount per year is £960, i.e. the greater of the rent and 20% of the value when first provided, i.e. £725. The Food Emporium also pays the fuel and running costs (insurance, servicing, etc.). If the motorbikes were available for all of 2025/26 and the running costs were £700, the taxable amount for each employee is £1,660, and The Food Emporium must pay Class 1A NI of £498 (£1,660 x 2 x 15%).
Note. The values used for the calculations must include the full VAT amount even if the business reclaims all or part of it.
The rules can result in a taxable benefit in kind even if there’s no private use. The bike only has to be “available” for private use by the employee or a member of their family or household for the tax to apply.
When is a motorbike “available”?
The trap is especially tricky to avoid because even if you intend for the motorbike to be used only for business journeys the rules say that it counts as “available” for private use unless you specifically prohibit private use and no private use occurs.
Private use that’s incidental to business is ignored and won’t by itself result in a taxable benefit in kind.
For example, if while on a business journey the employee stops on route, say for a lunch break at a café. Where there is a taxable benefit, i.e. because the bike is available for or actually used for private journeys, it is reduced in two circumstances: where the use of a motorbike is shared by employees; and it is not available to the employee for a period.
To prevent a tax and NI charge, have a motorbike usage policy which clearly states that private use is prohibited.
Providing Motorbikes to Employees? Make Sure You Are Not Paying More Tax Than You Need To
Many employers are surprised to discover that providing a motorbike to an employee — even if it is only ever used for business — can trigger an unexpected tax and NI bill if the right steps are not taken.
As the example above shows, the costs can add up quickly:
A taxable benefit of £1,660 per employee
A Class 1A NI bill of £498 for just two employees
And that is before considering the personal income tax each employee faces
The Traps Most Employers Miss:
A motorbike does not have to be used privately to trigger a tax charge — it only has to be available for private use
Simply intending it to be used for business only is not enough
Running costs such as fuel, insurance, and servicing add to the taxable amount
VAT reclaimed on the bike still counts in the benefit in kind calculation
The Good News — It Is Avoidable With the Right Policy
A clear, written motorbike usage policy that explicitly prohibits private use — and is actually followed — can eliminate the tax charge entirely.
Our team can help you:
Draft or review your motorbike usage policy to ensure it meets HMRC requirements
Calculate your current benefit in kind exposure across your workforce
Ensure your Class 1A NI reporting is accurate and complete
Advise on the most tax-efficient way to provide vehicles to employees
Don't Wait Until HMRC Raises a Query
Our team can help you understand your options, communicate with HMRC on your behalf, and put a clear plan in place to resolve your tax debt.
📞 Contact Us to speak with a member of our team about your tax debt today.
📅 Book an Appointment for a one-to-one consultation and get tailored advice on managing your tax debt effectively.
A simple policy change could save your business hundreds of pounds every year. Let us help you get it right.
