Salary sacrifice journal

Didn't find your answer?

Hi, 

Where I work, there's an employee who asked a loan to the company, and the repayments are meant to be made via salary sacrifice. 

I can't get my head around the journal for this. As the loan is an asset the repayment needs to be CR to the loan, but where does the DR goes to?

Could someone help, please? We do salary sacrifice already for pension, but basically it just decreases the gross expense and increases the pension expense. But can't see how to do it for the loan as it's not an expense, or shouldn't.

Thanks in advance

Replies (6)

Please login or register to join the discussion.

avatar
By Wanderer
04th Aug 2022 18:18

WHY is a loan being repaid under salary sacrifice?????

Thanks (2)
Replying to Wanderer:
avatar
By Hugo Fair
04th Aug 2022 18:51

Or even more to the point ... it can't be.

OP puts his finger on it when saying "But can't see how to do it for the loan as it's not an expense".
No indeed - what it is is a BiK (for which Salary Sacrifice is not available and so repayments need to be made out of Net Pay).

The only alternative (if the Loan isn't too large) is for it to be treated not as a Loan but as an 'Advance of Pay' ... but that would really need to be repaid in full in the next pay run (and will still come out of Net Pay).

BTW I presume this employee is not also a Director of the company, nor a family member of a Director?

Thanks (3)
Replying to Hugo Fair:
avatar
By Miguel337
04th Aug 2022 19:34

Oh I see, so basically the loan will need to be paid out via net then. Thanks, I didn’t know this I will have a chat in the morning at work. Although it makes sense now that I read more carefully about salary sacrifice being only for non-cash benefits.

No, the employee is not a director or a family director.

Thanks (0)
Routemaster image
By tom123
04th Aug 2022 19:35

We could all borrow from our employers then pay back from gross..

Yay....

(Or not)

Thanks (0)
Replying to tom123:
avatar
By Miguel337
04th Aug 2022 19:44

It would be the perfect world lol

Thanks (0)
RLI
By lionofludesch
05th Aug 2022 07:45

Agree - it's not salary sacrifice at all.

Thanks (0)