Cycle to Work Scheme Double Entry

Cycle to Work Scheme

Didn't find your answer?

Hi,

My company has just enrolled an employee into the cycle to work scheme, we have paid the bike supplier £500 and we are then deducting this equally over 12months from the employees gross salary through a salary sacrifice arrangement. I wanted some advice on the double entries for this in my accounts if anyone has experience of this?

Thank you 

Replies (9)

Please login or register to join the discussion.

avatar
By FactChecker
15th Feb 2024 21:49

Start several steps further back in your thinking ... if you have properly set up a salary sacrifice arrangement, then you are NOT supposed to be deducting 'this' (or anything related to it) from the employee's gross salary.
SalSac is an agreement to contractually reduce salary (not to leave it contractually unchanged whilst taking deductions from it) ... and is only an option within a strict set of constraints that must be fully complied with - otherwise the agreement is void.

Thanks (3)
Replying to FactChecker:
avatar
By FactChecker
15th Feb 2024 21:55

BTW did your accountant not help to sort out your similar confusion last month (with regard to SalSac and an EV)?

Thanks (2)
avatar
By michelle_l_Ldn
15th Feb 2024 21:53

Ok thanks, yes the salary is contractually reduced due to the cycle scheme. We are paying the full amount upfront £500 to the bike provider, can I show this as an expense ‘cycle scheme’ in the accounts? Would this be correct?

Thanks (0)
Replying to michelle_l_Ldn:
avatar
By FactChecker
15th Feb 2024 22:00

Sorry but, as per copious similar threads on here, there are Cycle Schemes and Cycle Schemes - or to be clear, many alternative schemes often constructed in different ways and subject to different terms ... all of which can affect your book treatment.

You *really* do need to talk to your accountant (or to hire one if you haven't already done so), as it's only a matter of time otherwise before expensive mistakes are made.
Oh - and this site isn't intended (or allowed) to provide specific advice.

Thanks (3)
Replying to FactChecker:
avatar
By michelle_l_Ldn
15th Feb 2024 22:02

Ok thanks I will check the specific agreement with my accountant & auditors to ensure we are treating this correctly.

Thanks (0)
Replying to michelle_l_Ldn:
VAT
By Jason Croke
16th Feb 2024 08:13

michelle_l_Ldn wrote:

Ok thanks I will check the specific agreement with my accountant & auditors to ensure we are treating this correctly.


It would make sense, if you have an auditor and an accountant, to check with them, they will know more about your business than anyone here.

I'd have expected any business with an accountant and auditor to be able to pick up the phone for a query like this and not incur any time on the clock.

Thanks (0)
DougScott
By Dougscott
15th Feb 2024 23:58

If the company has bought the bike directly then it is a company asset and not revenue expenditure. The company is only loaning the bike to the employee. The employee MAY be given the option to purchase the bike at the end of the salary sacrifice arrangement but the company must sell it to the employee at market value as set out in HMRC guidance.

Thanks (0)
VAT
By Jason Croke
16th Feb 2024 09:53

Worth a read on how the scheme should work in most scenarios https://help.cyclescheme.co.uk/category/635-city-bike-hire

Thanks (0)
avatar
By Leywood
16th Feb 2024 10:02

Always ask your Accountant and/or Auditor. Preferably before you enter into a scheme or before you do something that is new to you/your company.

Thanks (0)