Tax Free Fitness

January has got to be a time when we all want to burn off the Christmas calories, but joining a Gym can be expensive so is there a way you could get your company to pay and get it as a tax free benefit.

HMRC allow tax free treatment provided sporting or recreational facilities (or vouchers that are exchangeable for their use) that meet all of the following conditions:

  • The facilities are available for use by all of your employees.
  • The facilities aren’t available to the general public.
  • The facilities are used mainly by employees or former employees or members of employees’ families and households. (The facilities don’t have to be used mainly by your employees – this condition also covers use of the facilities by employees of other employers if you’ve grouped together with them to provide the facilities.

The tax and NICs exemption doesn’t apply if you provide any of the following:

  • facilities based at premises used wholly or mainly as a private dwelling
  • holiday or other overnight accommodation (including any associated sporting facilities)
  • use of a mechanically propelled vehicle (including road vehicles, boats and aircraft)

So that seems to rule out most Gyms, so what can you do?

Personal Trainers could be your ‘sports facility’ provided they are made available to all employees as part of  a benefits package

Join a club run by other employers, many large businesses have their own sports and social club perhaps your company could use their facilities

Get together with other employers and hire a local Gym or Health Club at specific times for example set evenings and exclude members of the public on those evenings

If these options don’t work for you, you could still get your employer to pay for Gym Membership as part of your package, the benefit in kind tax will be less than if you pay direct out of net pay.

For employees earning at a rate of less than £8,500 per year, you have

  • no reporting requirements
  • no tax or NICs to pay

For company directors or employees earning at a rate of £8,500 or more per year:

  • report on form P11D – section K
  • pay Class 1A NICs on the value of the benefit

It goes without saying that you must have written policies in your employee handbook and contracts, you also need board minutes to support and explain the new benefits and all charges must be to the company (you can’t claim on expenses).

22 thoughts on “Tax Free Fitness

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