If an employee would like to sacrifice part of their wages for, for example, childcare vouchers, or to join a bike-to-work scheme, this is how you would record it in FreeAgent.
We’ll use the example of an employee giving up part of their salary to join an employer-provided childcare vouchers scheme.
When creating your Payroll Profile, enter your employee's gross wage less the value of the childcare vouchers. For example, let’s say that your employee’s gross wage is £2,000 per month and your employee is sacrificing £243 of that gross wage towards childcare vouchers. You would enter £2,000 - £243 = £1,757 in the ‘Basic Pay’ field. The £243 should not appear on the payslip at all. This is because, for a salary sacrifice scheme to work, the employee must have given up all rights to that salary, so the salary that they’ve given up doesn’t count towards, for example, mortgage applications.
When you come to pay the nursery or voucher scheme, explain the payment from your FreeAgent bank account as Type = Payment, Reason = Childcare Vouchers.
FreeAgent is registered with the Financial Conduct Authority under the Payment Services Regulations 2017 (register no. 799763) for the provision of account information services.
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