UK Bike to Work Scheme - Salary Sacrifice

Hi SCBC 

Thanks for joining us here on the Community :waving_hand:

To help with your query, can I check if you're using the Standard or the Advanced version of payroll in QuickBooks Online? 

An easy way to check this if you're unsure is to select the Employees tab - this will show two separate tabs for 'Employees' and 'Payroll' if you're using the Standard version. 

Thanks

Hello,

it is the standard version

Hi, SCBC.

I can share information regarding accounting the payroll salary sacrifice in QuickBooks Online.

Accounting the salary sacrifice using QuickBooks Online Standard Payroll is currently unavailable. The option to set this up is only available in QuickBooks Online Advanced Payroll.

I have put a comparison link in to help you which shows you the comparisons between the two payroll products to make sure you make the right choice. In case you'll consider upgrading your payroll subscription to be able to account for the salary sacrifice. You can get in touch with them through this link: https://quickbooks.intuit.com/uk/accountants/payroll/.

Additionally, you can go through this article: Workplace pensions in QuickBooks Online Standard Payroll. This will give you steps on how to set up an employee's workplace pension as well as a guide in choosing your pension provider.

Get back to me if you have any other questions. I'm a few clicks away to help. Have a good one.

I thought, great! I'll use advanced payroll, ordered it, started setting it up, couldn't find cycle to work salary sacrifice, phoned QB's, and they said no, advanced won't do it. That was a day lost, that I'll never get back!!!

QB Desktop used to deal with this perfectly.

They broke so much when they forced everyone online.

The online version really isn't fit for purpose.

6 months on and still trying to work out how to do this... You can kludge the correct tax and NI calculation by making a negative bonus payment as the deduction for the monthly cyclescheme payment from the employee. Haven't worked out the correct journal to reduce the cyclescheme liability yet

Does the negative bonus payment have it's own category?

or maybe have a look at this Q&A, see if you can do it this way???

Seems a bit convoluted to me, but maybe, a way around it????

How do I handle the Cyclesheme on Quickbooks and payroll? I am paying for a bike and claiming the VAT.. I need to use a salary sacrifice scheme, but account for vat?

The VAT is easy. just process the bill as normal but post it to a non current asset account (I set one up called "Cyclescheme") rather than an expense account.

So that will leave you with an asset on your balance sheet that should be reduced each time you take a payment from the employee. Finding the correct journal to make that happen correctly is the bit I haven't worked out   

I also set up a bonus that I process the deductions from pay against and named it Cyclescheme payments. This correctly calculates the tax the employee should pay  - effectively deducting the amount from gross pay before the tax is calculated.

It is more convoluted than it should be. If you could choose the account the negative bonus payment was set against you would just set it to the Cyclescheme asset account  and the loop would be closed. The functionality is crippled compared to the desktop version.    

"or maybe have a look at this Q&A, see if you can do it this way???"

Which Q&A is this referring to?

Apologies, it's in the community forum

I am just starting to research this when I came across this thread.  Can you not use the Deduction Categories in your Payroll Settings to accomplish the salary sacrifice piece?  Set up a Pre-Tax Deduction for it instead of a negative bonus?  I'm going to give it a try.  Seems like Advanced Payroll does not have a cycle scheme deduction set up already but allows you to set one up yourself this way.

I don't know why the QBO person never responded further to the comment thread to correct or add anything.  Perhaps the Deduction Categories won't work.  I have used Deductions in Standard Payroll before that have withheld amounts from the employee but then not reported to HMRC correctly, even when I was following the instructions from QBO themselves.  This platform can be incredibly infuriating.

I wouldn't think the Deduction Categories will help with the journal for the reduction to the liability, however.  So that may still be an issue here.

---

@tiffanycarol wrote:

I am just starting to research this when I came across this thread.  Can you not use the Deduction Categories in your Payroll Settings to accomplish the salary sacrifice piece?  Set up a Pre-Tax Deduction for it instead of a negative bonus?  I'm going to give it a try.  Seems like Advanced Payroll does not have a cycle scheme deduction set up already but allows you to set one up yourself this way.

 

Did this work for you? I too am looking into this and thought that setting up a pre-tax deduction should do the job, so it would be good to hear if it all worked properly and reported to HMRC?

Yes, it seems to work beautifully!

Hi,

I would like to know about this too - I am unsure if I have the standard or advanced version of QuickBooks online - can you please clarify how to mark on payroll a salary sacrifice for he cycle to work scheme?

Thanks,

Abi

Hi Abi

I believe you have to be running QB's Advanced Payroll to be able include Bike to Work scheme, it's not that straight forward to use, but QB's online help, got me sorted.

Thank you for replying so quickly!

Do you have a link to any online help articles / videos for this? Or so I need to chat to someone from QB directly?

Thanks

We'd want to make sure that we get this sorted out, Abi56.

For now, we don't have a specific guide article for Bike to Work Scheme QuickBooks Online Payroll. 

I would suggest reaching out to our chat or phone support teams so they can help you set up the salary sacrifice. Here's how:

1. Click the Help menu in the upper-right hand corner of QBO.
2. Under the QB Assistant tab, type in "talk to a human" and press Enter.
3. Select Contact a human.
4. Choose between Live Chat or Call me back.

In the meantime, you can check out this article on how to create a deduction in QBO Advanced Payroll: Setting Up Deductions in QuickBooks Online Advanced Payroll.

You can also visit this link where you can access some of the most commonly used articles when running payroll: QuickBooks Online Advanced Payroll hub. 

Please don't hesitate to reach out to us again if you have other questions. I'd be glad to jump right back to help you again. 

Just to clarify, is there no way I can account for a salary sacrifice in Standard payroll? 

I only have 1 employee who wants the cycle to work scheme so seems mad paying all the extra money for Advanced payroll just to do this?

I understand your need to set up salary sacrifice using QuickBooks Online Standard Payroll, Kerry.

Currently, the feature mentioned above is only available in QBO Advanced Payroll.

Feel free to browse our QBO Help Page to find out some useful articles and video tutorials about handling your account.

You can always comment if you have other questions regarding payroll or QuickBooks in general. We'll make sure to respond as soon as we can. Keep safe.

Another epic fail from Quickbooks!

Quickbooks Desktop met everyone's needs and you absolutely trashed it to produce this mockery of a platform.

Like a user above, I also have just one employee who wants to buy a bike through the scheme set up by the government, designed to support the workforce into getting out of cars and onto bikes by saving them money.

Woop-de-doop!  The member of staff has saved £150 on a bike and it's going to cost me £48 a year to run the scheme for him - if I up my subscription as you suggest - work that one out?!  I would have been better off just handing him the £150 myself and saying 'Here, go buy yourself a bike, it will be cheaper for me this way'.

I am hopeful that I can work this one out manually, as I have had nothing but trouble from getting help from Quickbooks support - usually they are reading the same support pages that I am and I am usually further ahead in my knowledge and understanding of the problem.  I have had my accounts trashed by being given the wrong advice by Quickbooks support and will choose to work this one out on my own - presumably I can take deductions from someone's account without upping my subscription...who knows though...Quickbooks Online was set up as an inferior product to Quickbooks Desktop from day one.  I so wish that I had taken the opportunity to change platform when change was forced - I just thought that the online version would mirror the desktop one and I couldn't have been more wrong....  

I have gone with the workaround suggested by users above, here are the details of how to set this up yourself:

When completing pay, I have clicked on 'edit' at the end of the Employee's line of payroll and have then clicked on 'add/edit a bonus or other payment' and selected the '+' sign to create a new pay type.  The category I chose was 'other earnings' and named it 'Cycle to Work Scheme'.  I then put a negative amount in for the monthly repayment as the default amount and saved it.  This deducts the correct amount each month before tax -  saving the employee money on tax and national insurance - until I either change the default amount to zero or disable the category.

The only drawback that I can see using this system is that there is no automatic transfer of funds across from the payslip to an account detailing the payments against the amount which I paid for the bike, which would have been easy to set up in the old desktop version, to be able to see when it's all paid off and for payments to automatically stop.

Instead, I have made a note of which month the payment runs from and to and will check each month that it's in place and I will be sure to switch the category off after the final month.