Cycle Solutions: VAT and Salary Sacrifice Treatment When Helmets Are Included

Introduction 

Cycle Solutions – Invoicing vs Salary Sacrifice values when a helmet is selected 

This article provides clarity around the invoicing and payroll reporting for Cycle Solutions orders with a helmet included. This article is intended for informational purposes only and does not constitute tax advice. Please consult your tax advisor.

Summary

Helmets are invoiced with 0% VAT, but salary sacrifice must include VAT because your organisation is hiring the equipment to the employee, and this hire is a standard‑rated VAT supply. Cycle Solutions therefore uplift any helmet value by 1.2, which ensures the correct VAT is collected through salary sacrifice. 

What you will see on Paperwork

The following information is for Public Sector clients accessing this benefit via a framework.

Reward Gateway | Edenred invoice to you

• Bikes and accessories have 20 percent VAT
• Helmets always show as 0% VAT

Cycle solutions Backing Data (provided on GoAnywhere for invoicing purposes)

• Data breakdown of all orders including the total salary sacrifice amount and the total RRP
• An itemised list of all orders showing the VAT rate

Your SmartPay Detailed Deduction report (provided on SmartPay or GoAnwhere for payroll purposes)

• Shows the total deduction amount (total annual amount including any VAT)
• Shows the monthly deduction amount (total monthly amount including any VAT)
• If a helmet was ordered, this includes a 1.2 uplift of the order RRP (Recommended Retail Price) to cover the additional VAT liability.

• This is the total amount you should recover from the employee via salary sacrifice 

   

Example

• Supplier invoice: bike £1000 + VAT = £1200, helmet £100 (0% VAT)
• Your invoice from RG: mirrors that
• Salary sacrifice to recover: £1100 + VAT = £1320 (or £110 per month over 12 months)

This includes VAT on the helmet element because it forms part of the hire to the employee. 

Why This Protects Your VAT Position

In all cases, we recommend you obtain formal tax advice in relation to the arrangements proposed to ensure that you fully understand the VAT implications for your organisation, however, without the uplift, your organisation would collect too little Output VAT to cover the VAT due on the hire and would take a loss. Cycle Solutions include the uplift so that:

• Salary sacrifice fully covers the hire value plus VAT
• Your input VAT and output VAT positions reconcile smoothly
• You never under‑recover costs associated with Cycle to Work hires

Payroll Deduction

Where do I Find the Information on What Payroll Deduction is Made?

If you’re using the Cycle Solutions backing data, the monthly amount is the column Total Salary Sacrifice. If you’re using Detailed Deduction Report, the monthly amount is the column Deduction Amount.

Need Help Reconciling an Invoice or Credit Note

Share the employee name and order reference to:

Accounts Receivable accounts.receivable@rewardgateway.com and we can provide a side‑by‑side breakdown of:

• RG invoice
• Cycle Solutions backing data to show exactly how all three figures tie together.