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A
accounts377
October 6, 2020
Question

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?

  • October 6, 2020
  • 1 reply
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1 reply

G
GeorgiaC
October 6, 2020

Hi accounts377, 

 

Have you already selected a payroll plan in QuickBooks Online? The option to set up the salary sacrifice scheme is currently only available in the QuickBooks Online Advanced Payroll.

 

You can reclaim VAT using a 100% VAT transaction, the steps below cover how to do this in your QuickBooks:

 

1) Click on + New and select Bill

2) Enter the bill details (date, payment account) and set the VAT 'Amounts are' to 'Exclusive of VAT'

3) On the first transaction line, choose the account you want to use. For the rate, enter £0.01, and for the VAT code, select the 20% Standard code

4) On the second line, select the same account. For the rate, enter -£0.01, and choose the Exempt VAT code

5) Scroll to the subtotal - the total of the invoice will be 0. You can then edit the amount in the VAT box to input the amount you need - this will post to box 4 of the return to reclaim

 

Thanks 🙂

A
accounts377Author
October 6, 2020

Hmm.

 

I don't run advanced payroll - and it's not worth upgrading for 1 bike so I will have to fudge it somehow as a reduction in wages. 

 

It's not the claiming of the input VAT that's the problem, its the ouput VAT on each payment by the employee, when the VAT is passed on to them (the ultimate consumer) If I am thinking it correctly.. I could invoice it, but how would that invoice ever get paid - it's more of a notional transaction... 

 

 

    DivinaMercy_N
    DivinaMercy_N
    October 6, 2020

    Allow me to chime in and share some info, @accounts377.

     

    Employee's deduction from wages can't claim the output VAT since payroll and VAT in QuickBooks Online (QBO) are separately recorded. To resolve this, you can follow the steps given by, GeorgiaC. But, instead of Bill you'll have to use Invoice. 

     

    Here's how:

     

    1. Select New and then Invoice.
    2. From Customer dropdown, choose a customer.
    3. Review the Invoice date. Then in the Terms dropdown, select the due date.
    4. From the Product/Service column, select a product or service.
    5. Enter a quantity, rate, and change amount if needed.
    6. Pick a VAT rate.

     

    Then, to pay the invoice, you can create a Journal Entry. You'll need to transfer the employee's deduction then transfer to debtors and name it to the customer where you created the invoice.

     

    You can also seek handy articles that will help you while working with QuickBooks, please visit this link: QuickBooks Online Help articles.

     

    Let me know how this goes, @accounts377. I'm here if you need further assistance with setting up a salary sacrifice scheme in QBO. Have a good one.

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