Set up Cycle to Work deductions

If you have a Salary Sacrifice Cycle to Work scheme in place, you can set up a pre-defined Pay item to ensure deductions are processed correctly.

To learn more about Cycle to Work, see HMRC’s Cycle to Work Guidance for Employers.

How to set up Cycle to Work deductions

1. From the left side bar, navigate to Employees.
2. Select the relevant employee.
3. Click into the Pay Items tab.
4. Click Add pay item.
5. Select Cycle to work.
6. Fill in the Cycle to work form. The Amount per payroll will automatically calculate based on the figures entered.
   • Total amount: Enter the total loan amount.
   • Already paid: If you have transferred to UK Payroll part-way through a scheme’s term, enter the total figure already recovered.
   • Split payment over: If you’re setting up a new scheme, enter the amount of months you’ll be recovering the total cost over. If you have transferred to UK Payroll part-way through a scheme’s term, enter the amount of months you will be recovering the remaining balance.
   • Starting from: If you are setting up a new scheme, enter the date the first deductions should be processed. If you have transferred to UK Payroll part-way through a scheme’s term, enter the first date the deductions will be processed in UK Payroll (not the original start date).
   • Include pay item in pension calculations: If you want pension contributions calculated on salary after the Cycle to Work deduction, mark Include pay item in pension calculations.
7. Click Save & close.

FAQs

I am processing a parallel payroll and have entered the correct information, but the amount per payroll is incorrect.
If you are processing a parallel run for a monthly payroll cycle after the 5th of the following month, the amount per payroll figure will be incorrect. Instead, amend the scheme details as if you were adding the deductions to start in the next payroll cycle, and manually add a Gross deduction pay item to the payroll draft to account for the Cycle to Work scheme.