Hi,
Please could you advise me to work out the best way to set up accounts on solar for the cycle to work scheme. I am intending to create an expense account, called "cycle to work" and put the payment for the employees scheme vouchers in there (showing the vat element paid). They then make monthly contributions from salary (sacrifice) so do I allocate a negative amount on the "money paid out" to the employee in their monthly salary allocated to the cycle to work account with the vat set at 20%. I believe I have to account for vat in the employees monthly contribution, this means that I would have to change the vat treatment in their monthly salary "money paid out" from "out of scope" to "purchase of services from UK supplier". Does that all sound correct or is there a better way?

Hi Duncan,

I think you are right to allocate the purchase of vouchers to a 'Cycle to Work' expense account. However, I don't think you should change the VAT treatment on the employee payment - leave this as 'Out of Scope'. Instead, record a separate Money Received transaction with the From Account set to 'Cycle to Work', with the Deposit Into Account set to 'Cheque Account' and with VAT at 20%. (This means that you are recording two employee payments in Solar Accounts even though there will only be one payment appearing on your bank statement).

Note that I'm not an expert on this - please check this approach with your accountant.

​Regards

Mark,
Thanks for the reply. To clarify this, if I do as you suggest what should I put in the "money paid out" for the employees salary? Do I not put anything in for their contribution to cycle to work and mark the amount paid to the employee as the gross amount (ie net pay + cycle to work contribution). If I don't do this then the "cycle to work" account will not balance.
Thanks

Hi Duncan,

(Sorry for my delayed response - I didn't notice your follow-up question).

Yes you are right - when recording the employee cost enter the 'gross' amount in the Amount Paid of the Money Paid Out window. You can think of it as though you paid this money to the employee, who then paid you for the cycle to work scheme (which you record with the separate Money Received transaction).

​Regards,