Reclaiming VAT on your custom motorcycle, parts and accessories
Btw, or VAT, is one of the first questions a switched-on entrepreneur asks about a motorcycle on the books. The honest answer has two halves, and once you understand both, the picture is simple and surprisingly favourable.
A note up front: this article is general information, not tax advice. VAT rules and your eligibility depend on your situation. Always confirm with your own accountant or tax adviser.
Half one: the motorcycle itself
A custom motorcycle is usually built on a classic donor, and second-hand vehicles often change hands under the margin scheme. Under that scheme there is no separate VAT line on the motorcycle. That sounds like a downside, no VAT to reclaim, but it is really the opposite: there is also no VAT to pay on the bike. You simply pay the price, with no VAT layer on top and none to claim back. We explain this in depth in the margin scheme explained.
Half two: the parts, accessories and gear
This is where VAT works in your favour. The new components that go into a build, the accessories you add, and the protective gear you buy to ride safely usually do carry VAT. As a VAT-registered business, you can reclaim that VAT to the extent that you use the items for business. New exhaust, lighting, a quality helmet, a jacket, gloves: each invoice with VAT on it is a potential reclaim.
Business use versus private use
The rule is straightforward. You reclaim VAT for the business share. If the motorcycle and its gear are used partly for private trips, you apply a reasonable split and claim only the business portion. Clean records make this painless and defensible. The practical side of keeping that tidy is covered in records and trip logging for a business motorcycle.
Keep your invoices, keep it reasonable
None of this works without paperwork. Keep every invoice that shows VAT, make sure they are addressed to your business, and keep the spending business-like and proportional. Do that, and the VAT you reclaim on parts, accessories and gear quietly lowers the real cost of the whole build.
The bigger picture
VAT is one piece of a larger advantage. For the full overview, including the absence of benefit-in-kind and the low road tax, read the complete guide to riding a custom motorcycle through your business, and run your own numbers on the business riding page.
Reminder: general information, not tax advice. Your VAT position depends on your situation. Always confirm with your own accountant or tax adviser.
Frequently asked questions
Can I reclaim the VAT on a custom motorcycle?+
Often not on the bike itself. A custom frequently falls under the margin scheme, which means there is no separate VAT on the motorcycle and therefore nothing to reclaim. There is also no VAT cost. This is general information, not tax advice.
On which costs can I reclaim VAT?+
On new parts, accessories and protective gear that do carry VAT, you can reclaim the VAT as a VAT-registered business, to the extent of business use. Keep your invoices and keep it business-like and reasonable.
What if I use the motorcycle partly privately?+
Then you reclaim the VAT only for the business portion. A reasonable split between business and private, supported by your records, keeps it clean. Your accountant can help you with the right ratio.
Do I need to be VAT-registered for this?+
Yes. Reclaiming VAT is only possible if you are a VAT-registered business filing VAT returns. If you fall under an exemption or the small-business scheme, it works differently. Confirm this with your adviser.