Corporate Gym Membership

[muneeb84]

Hi,

We signed up to a gym membership and were told by the gym that if we did it as a corporate membership, we could have the amount taken out of our salaries and we would not have to pay tax or NI on the amount so would effectively workout a lot cheaper.

We have now told the accountant about this and asked him to deduct the amount from the salary as a wage sacrifice and explained him the full details - he has come back saying this is not the case and you would still need to pay the tax and NI so it would not work out any cheaper for you.

Can someone please help us out on this before I speak to the gym about it?

Thank you

 

[MikeJ]

You pay personal tax as it's a benefit in kind, and the company pays NI. You don't pay personal NI, so it's slightly cheaper. (I think....)

 

[UK Contractor Accountant]

We are talking about a salary sacrifice scheme here were you give up part of your salary in exchange for a non cash benefit e.g gym membership.

The salary sacrifice will save tax & ni.

 

[David Griffiths]

The salary sacrifice will save tax & ni.

How does it save tax? The taxable salary is replaced by a taxable benefit.

It saves employee NI, but not employer NI as the Class 1A is the same as the Class 1 on the salary sacrificed.

The company will also have to account for VAT on the value of the salary sacrifice

 

[muneeb84]

We are talking about a salary sacrifice scheme here were you give up part of your salary in exchange for a non cash benefit e.g gym membership.

The salary sacrifice will save tax & ni.

Can you please explain how this would work as this is what we were initially told but now the accountant says no...

 

[UK Contractor Accountant]

So is there a way of providing a tax-free fitness club? In simple terms, sports and recreation “facilities” can be classed as a non-taxable benefit (under ICTA 1988, s.197G) if they are: (1) generally available to all your employees; (2) not on domestic premises; and (3) not a facility provided for the public generally.

You could hire a personal fitness trainer to design a fitness plan for every employee. The “sports facility” is then the personal fitness trainer. At, say, £12 a session two days a week, that’s almost £100 a month tax-free!

Club together with other companies and hire the gym or health club for exclusive use for your respective employees on say certain evenings, so excluding the members of public at those times (HMRC Revenue Manual SE 22855 deals with this).