In one of our articles last year, we shared how a limited company may be able to claim Personal Training, to save tax, which you can read through here. It detailed the full information about the best resolution and the requirements of the company offering Personal Training to their employees as a tax free solution.In short - the gym expense, if you pay the membership yourself, will come from income that has already had tax deducted. However, if the company pays, then you save some tax on it. The tax on this will be less than the amount than you would have to pay in salary and you would not pay any employees National Insurance contributions. However, it should be treated as a benefit in kind to your Director/Employee based on the amount paid. Your company will also get a tax deduction for the cost of the whole gym membership. In addition, the National Insurance paid by the company on the value on the benefit in kind gets tax relief. So this means there is more money left in the company for you to take at a later date.
It is necessary to take steps to make sure that there is no room for a challenge by HMRC and the paperwork has to be drawn up correctly. If we leave it as a business expense it has to be reported under P11D - which is the form used for all benefits in kind, which is filed annually. The paperwork needs to be in place, using a Board of Minutes to ensure that there is proof this benefit has been agreed upon by the company, as a way of rewarding a director for services. There is no need for any special wording, but something like the below can be used:"Meeting of the Board of Directors of COMPANY on ...........................(date should be before year-end ideally before the first payment is made).It was resolved that the company approved the payment of the annual subscription for personal training services up to the limit of £X as a part of their generation package. This award has been made in recognition of their continuing contribution to the company."This should be signed by the Chairman of the company.
I insist that Directors must have a contract of employment as a starting point for any limited company. This, in turn, will then need to be updated if the personal trainer or gym expense will be a part of the remuneration package. Since it is a variation you will need to incorporate it into the contract of employment by the way of an addendum, such as the below:"As of DATE the company will pay personal training expenses up to the limit of £X per calendar year. This benefit in kind is to be treated as part of the remuneration package with the company. The value of the benefit in kind to be included will be including VAT."Ensure that all invoices/or the annual invoice, is addressed to the company and make it absolutely clear that the liability for the payment belongs to the company and not to the Director personally.I hope this helps you to more fully understand if personal training or gym membership may be more suited to being paid for by your company. During these times, it is so important to take care of your physical and mental wellbeing, and this can be just one way to add this to your tax efficiencies, whilst also benefiting yourself and your team.
