Company Motorcycle Benefit-in-Kind Tax UK 2026/27

Why Motorcycles Are Taxed Differently from Cars

Company car benefit-in-kind tax is calculated using a formula based on the vehicle's list price and its CO2 emissions (with a much lower flat percentage for zero-emission cars). This formula is specific to vehicles that meet HMRC's definition of a "car" — and a motorcycle does not meet that definition. As a result, motorcycles fall under a different, simpler set of benefit-in-kind rules.

Where an employer provides a motorcycle that an employee also uses privately, the taxable benefit is generally calculated as a percentage (commonly 20%) of the cost to the employer of providing the motorcycle each year, rather than using list price and emissions bands.

Worked Example: £12,000 Company Motorcycle

• Employer's cost of providing the motorcycle: £12,000
• Annual taxable benefit (approximately 20% of cost): £2,400
• Basic-rate (20%) taxpayer: income tax on the benefit = 20% x £2,400 = £480/yr
• Higher-rate (40%) taxpayer: income tax on the benefit = 40% x £2,400 = £960/yr
• Employer: pays Class 1A National Insurance at 15% on the £2,400 benefit value = £360/yr

Compare this with a company car of similar value — even a low-emission petrol car in a favourable CO2 band would typically generate a larger annual taxable benefit than a comparable-value motorcycle, because the car BIK percentage bands for petrol and hybrid vehicles start well above the roughly-20% rate applied to motorcycles.

Fuel Benefit for Motorcycles

If the employer also pays for private fuel used on the motorcycle, this can create an additional taxable benefit, calculated with reference to the actual cost of fuel provided for private use (unlike the flat fuel benefit charge that applies to cars, which uses a fixed multiplier regardless of actual private mileage). In practice, many employers ask motorcycle users to reimburse private fuel costs or keep mileage logs to avoid an open-ended fuel benefit charge.

When a Company Motorcycle Beats a Company Car

For employees who genuinely need to make frequent short journeys — courier work, urban commuting-heavy roles, some sales and field service positions — a company motorcycle can be considerably more tax-efficient than a company car of equivalent value, because:

• The 20%-of-cost benefit calculation is generally lower than the CO2-based percentage applied to most petrol, diesel and hybrid company cars
• Running costs (fuel, insurance, servicing) are typically much lower than a car, so the employer's overall cost — and therefore the taxable benefit — tends to be smaller in absolute terms too

This makes motorcycles worth considering as part of a company vehicle policy for roles where a two-wheeled vehicle is practical, alongside the more common salary sacrifice cycle-to-work and electric car schemes.

Avoiding the Benefit Entirely

If a motorcycle is provided exclusively for business use, with genuinely no private use — including no home-to-work commuting, which HMRC treats as private mileage — no benefit-in-kind charge arises at all. This requires clear evidence, such as the motorcycle being kept at business premises outside working hours, or a formal policy prohibiting private use that is actually followed in practice. Employers and employees should keep records to support this position if it's ever queried by HMRC.