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Cycle to Work - Accounting entries

What are the accounting entries for Cycle to Work scheme

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Hi Guys

I have recently setup a cycle to work scheme and finding it difficult to finalise the accounting entries. I have done some research on the website and cannot find any solid information that would confirm my accounting is correct.

Below a bit of background 

Bike bought for £1990.83 + VAT 398.17 = £2389

Opted for the option to give the benefit of Ni saving back to the employee so per month I am deducting from employee £174.94 and I have £24.14 of employer contribution saving

Those two amounts make up the £2389/12= £99.08

Accounting entries

1) Purchase of the Bike as a fixed asset and claim back the output VAT. Straight forward my only question would be around depreciation should we depreciate only for 12 months (length of Cycle to work scheme, I know employee could choose not to buy it back at that point)

2) Monthly payroll adjustment journl entry

Salary is sacrificed by the £174.94

Then I was planning on doing as follow

Create a P&L Account name Cycle to Work Scheme

Journal 1: Employee Salary Sacrifice and VAT        
Staff Remuneration  Dt 174.94   Being Employee sacrifice
Cycle to Work Scheme Ct   145.78 Being Employee sacrifice minus VAT
VAT Ct   29.16 VAT of the employee sacrifice
Journal 2: Company National insurance saving        
National Insurance Dt 24.14   Nier Saving
Cycle to Work Scheme Ct   20.12 Nier saving minus VAT
VAT Ct   4.02 VAT of the Nier Saving

This way the cycle to work P&L account after 12 months had credited back the original net purchase amount £1,990.83 the VAT claimed back as been paid back.

Would the Nier saving given back to the employee become benefit in Kind? 

I would really appreciate your advise on this.

Many thanks 

 

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