How to process employees on a Cycle to Work scheme

Summary

How to process a salary sacrifice Cycle to Work deduction in Sage 50 Payroll.

Description

If you take part in the Cycle to Work scheme, your employees can agree to reduce their wages temporarily to pay for this. This reduction in wages pays for the hire of a bike, accessories and equipment.

You can process this in Sage 50 Payroll with a salary sacrifice pay element.

Resolution

To comply with the national minimum wage (NMW), an employee can't sacrifice an amount that reduces their gross pay below the NMW.

For further information about Cycle to Work schemes, go to gov.uk.

If you set up a salary sacrifice arrangement for an employee with a salary sacrifice pension scheme, take note of ▼ how the calculation works.

The employee's pension contribution calculates on their reduced gross pay, after the other salary sacrifice deduction.

However, the employer salary sacrifice pension contribution amount depends on whether the pension scheme uses qualifying earnings thresholds:

If it does, the Employer pension calculates off full gross pay
If it doesn't, the Employer pension calculates off the employee's post sacrifice pay

Create a salary sacrifice deduction

If you already have a suitable salary sacrifice deduction set up, skip ahead to the assign a salary sacrifice deduction to an employee section.

Click Company, then Pay Elements.
Click the Salary Sacrifice tab, then click New.

Complete the new salary Sacrifice deduction as follows:

Reference	Your software assigns this, and you can't change it.
Description	Enter the name for your salary sacrifice deduction, for example, Cycle to work scheme.
Is this for Childcare Vouchers?	Leave this box unticked.

Click OK, then OK.

You've now set up your Cycle to work salary sacrifice deduction.

Assign a salary sacrifice deduction to an employee

Now you've created the deduction you're ready to ▼ assign it to your employee.

Enter the 'Total Amount' correctly during the steps below, as if you make a mistake with this ▼ you need to correct it.

If you enter the wrong amount and process one or more pay runs, the options to correct this are to either:

Rollback any affected periods and amend the Total Amount, then reprocess (recommended)
If the total is too low, wait until you reach this amount then create a new deduction for the remaining balance

Double-click the relevant employee.
Click the Employment tab, then click Pay Elements.
Click the Salary Sacrifice tab.
In the Scheme Name column, click the drop-down arrow .
Select the required deduction, then click OK.

Complete the scheme information as follows:

Sacrificed Amount	Enter the pre-tax, pre-National Insurance (NI) amount your employee has agreed to sacrifice from their salary each pay period.
Total Amount	Enter the total amount the employee has agreed to sacrifice. Your software stops taking deductions once it's deducted this total.
Childcare?	This is based on your deduction settings. If it's incorrect, amend the settings of the deduction at company level.
In Use	Check this says Yes.

Click Save, then Save.
Click Close.

You've assigned your salary sacrifice deduction to an employee. Your software deducts the Sacrificed Amount you set in each pay period you process.

NOTE: If your employee completes a scheme and decides to join the scheme again to purchase another bike, create and assign a new deduction.

Reports

As required by HMRC, salary sacrifice arrangements appear as a negative payment on the employee's payslip. However, on all other reports they appear with deductions.

To check the values deducted on your cycle to work scheme, use the following reports:

For a Pre-update report, click Pre-update Reports, then click the Analysis tab and use the Deduction Totals Current report
For a Post Update report, click Reports, then click the Employee category and use the Deduction Type History (Detailed) report

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How to process employees on a Cycle to Work scheme

Summary

Description

Resolution

Create a salary sacrifice deduction

Assign a salary sacrifice deduction to an employee

Reports

SUPPORT & TRAINING

PARTNERS

COMPANY

FAQs