BIK and depreciation
Afternoon,
Depreciation on our R66 - 12 year straight line.
BIK - as I am a shareholder / director / rated pilot, I was very concerned about the BIK, as 20% per annum of 880k (purchase price plus VAT plus running costs + VAT) tax liability would be totally uneconomic. As a previous post points out, HMRC's position is very clear - you incur BIK for all the time the machine is available for your use.
In my case that would equate to pretty much all the time.
We put together a list of customers and suppliers who require regular and justifiable visits by Directors and Senior Managers, along with the frequency of those visits. We then put down an estimated travel time by heli vs by road (from AA route planner). We calculated a time saving over the year and then adjusted it for a sensible percentage of times where the flight would be able to take place due to weather etc (think we used 60%).
On this basis, we demonstrated that the most influential members of the business would be more productive over a period of time, and this should result in improved business performance.
On this basis, HMRC gave us a pre-clearance that my personal BIK liability would be calculated based on percentage private hours versus total hours. This works well for us.
This method only works if the machine is genuinely used for the vast majority of flights for business purposes. We log each flight with a listing of who attended each meeting and with whom.
I'm not an expert by any means, but if you PM me, I'll gladly pass on the details of the accountants who dealt with it for me (they are not specialist aviation guys).
It is also well worth considering the handling of VAT - if machine for business use, good chance of full reclaim, but again getting a pre-clearance would be a good idea.
Hope that helps