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Cycle to Work - PAYE Implications

Cycle to Work

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Hi Guys,

Could I have some assistance re: the cycle to work scheme for a PAYE employee. The employer is a sole trader on basic PAYE payroll

It's an electric bike from Halfords at a cost of £2,700 to be used for the purposes of travel to and from work for one employee.

How do i account for this on the payslip?

 

Thanks so much,

 

Replies (8)

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By Anonymous.
15th Jul 2020 11:37

Not something I have dealt with but this looks like comprehensive guidance:

https://www.gov.uk/government/publications/cycle-to-work-scheme-implemen...

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By Wanderer
15th Jul 2020 12:58

The 'hire' charges are a deduction from the employee's gross pay before you calculate tax & NI.
Don't forget to account for VAT on the charges made to the employee.

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Replying to Wanderer:
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By Justanotherusername001
15th Jul 2020 15:58

Wanderer wrote:

The 'hire' charges are a deduction from the employee's gross pay before you calculate tax & NI.
Don't forget to account for VAT on the charges made to the employee.

77

Thanks for the reply, Wanderer. Do you mind providing an example?

If the employee gross earnings are around £800.00 per month and the cost of the bike is approx £2,700 one-off charge. Would the unused sum (2700-800) "roll-over" to subsequent tax months to be applied to future monthly gross earnings as relief?

Could you advise how the VAT would work? Do I just extract that amount from the £2700 cost? I am looking at this from a basic payroll PAYE perspective.

Thanks so much.

Thanks (0)
Replying to Wanderer:
avatar
By Justanotherusername001
15th Jul 2020 15:58

Wanderer wrote:

The 'hire' charges are a deduction from the employee's gross pay before you calculate tax & NI.
Don't forget to account for VAT on the charges made to the employee.

77

Thanks for the reply, Wanderer. Do you mind providing an example?

If the employee gross earnings are around £800.00 per month and the cost of the bike is approx £2,700 one-off charge. Would the unused sum (2700-800) "roll-over" to subsequent tax months to be applied to future monthly gross earnings as relief?

Could you advise how the VAT would work? Do I just extract that amount from the £2700 cost? I am looking at this from a basic payroll PAYE perspective.

Thanks so much.

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Replying to Justanotherusername001:
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By Wanderer
15th Jul 2020 17:03

Quite honestly you are so far off the mark about how these schemes are meant to operate and how to obtain the maximum benefit of them it's difficult to know where to start, not to mention minimum wage requirements.
Initially ask for a copy of the 'hire agreement' between the employer and employee then take it from there.

Thanks (1)
Replying to Wanderer:
By SteveHa
23rd Jul 2020 11:40

If it's a genuine Cycle to Work scheme bike, then there should be a contract between the employer and the supplier, and that's where the necessary detail will be found.

They typically include the comps for tax & NI with them.

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By [email protected]
23rd Jul 2020 08:08

I dont think the scheme is for sole traders and why is on a PAYE scheme if he is a sole trader?

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Replying to [email protected]:
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By Wanderer
23rd Jul 2020 08:12

lee-AT-lgaccounts.co.uk wrote:

I dont think the scheme is for sole traders and why is on a PAYE scheme if he is a sole trader?

I read the OP as the employer is the sole trader and it's in respect of one of their employees.
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