What does HMRC say about gym memberships paid by the company?
HMRC's Fitness at Work guidance gives the plain case: if you pay for an employee's gym membership, it is a taxable benefit in kind, which you report to HMRC on form P11D or through payroll. You can read it at https://www.gov.uk/guidance/fitness-at-work.
The rules for club memberships in general are at https://www.gov.uk/expenses-and-benefits-club-membership. When the company pays the fees, it reports the cost and pays Class 1A National Insurance on the value of the benefit. If the employee pays and the company pays them back, the money counts as earnings and goes through payroll.
If an employee pays back part of the cost, the guidance says the taxable amount goes down by what they pay. How that works in your scheme is a question for your accountant.
Is a gym on company premises treated differently?
Yes. Sporting and recreational facilities you provide directly, such as a gym at your workplace, can be exempt when they meet HMRC's conditions. Among them, the facilities must be available to all your employees and not available to the general public. The conditions are listed at https://www.gov.uk/expenses-benefits-sporting-recreational-facilities/whats-exempt.
For most companies, building a gym is not realistic, and it is no use to people who work from home or in another office. That is why the next two questions matter more.
Does salary sacrifice save tax on a gym membership?
HMRC's Fitness at Work guidance says that, in general, there are no tax or National Insurance savings for you or your employees when benefits are provided through salary sacrifice or other optional remuneration arrangements. A few schemes, such as cycle to work, follow their own rules.
Before you promise anyone a saving, ask your accountant whether anything in your arrangement changes this. Rules on salary sacrifice have narrowed over the years and can change again.
Are negotiated gym discounts a taxable benefit?
The same guidance describes this case too. An employer can negotiate a discounted rate with local gyms and leisure centres, and the discount itself is not a taxable benefit in kind, because the company has not paid anything to obtain it. If the company then pays part of the discounted price, that payment is a different question.
This is one reason why discounts at a few gyms near the office are a common first step for employee wellbeing in a small company. The details of your arrangement decide the treatment, so check them with your accountant.
What is changing in payroll reporting?
HMRC is moving the reporting of benefits from the P11D form to payroll software, in phases. Its published plan starts with company cars, vans and medical benefits and extends to most other benefits in a later phase. The current dates are at https://www.gov.uk/guidance/draft-guidance-and-legislation-to-aid-preparation-for-reporting-benefits-in-kind-in-real-time.
If you plan to pay for memberships, ask your payroll provider how they will be reported in the year you start, and whether you can already report them through payroll.
What should I ask my accountant?
Take these questions with you, together with a description of exactly what the company will pay and what employees will pay. If you are still comparing offers, start with how to choose a corporate wellness provider.
For a team in Ireland, the same questions apply under Revenue's rules on benefit in kind and its small benefit exemption, explained at https://www.revenue.ie/en/employing-people/benefit-in-kind-for-employers/valuation-of-benefits/small-benefit-exemption.aspx.
- If we pay all or part of a membership, how is it reported, and what does it cost us in National Insurance?
- If employees pay part of the cost, how does that change the taxable amount?
- Would a negotiated discount, with nothing paid by the company, be treated differently?
- Can we report the benefit through payroll now, and what changes in the coming years?
- Does anything change for people on different contracts or in different countries?
How does Yeki fit in?
Yeki gives you two ways to support sport, and you can use both. With Yeki Pass, our corporate gym membership, the company covers all or part of a monthly membership for gyms, studios, pools and sports centres, and pays one charge a month for the people who have activated it, with a list updated every month. If you would rather start with a few gyms near the office, Yeki sets up discounts for your employees at the gyms you choose.
Along with the proposal, we send you guidance on how the Pass is treated in your country, to take to your accountant. The company sees only aggregate numbers, how many people have activated the Pass and how much they use it, never who, where or when. There is no minimum number of people, and someone who leaves the company can keep their Pass going in their own name.
