Can I pay for a personal trainer through my company?
Hitting the gym is a great way to stay fit and it’s easy to slot in around your working hours. However, with a typical cost of around £600-£1000 per year, it’s not cheap.
When you consider that the subscription is paid for out of your taxed income, the true cost climbs even higher. You’d need to receive a bonus of around £1724 to cover the cost of a £1000 subscription – ouch!
But is there another way to cover the expense that makes it cheaper all round – maybe getting your company to pay for it instead? Here’s a look at how to get fit without saddling your bank account with a world of pain.
What the rules say
If your company shells out for a personal subscription on your behalf, such as joining the gym, you’ll still be slapped with tax on the equivalent cost. Your company will also have to pay National Insurance at 13.8%, but you won’t. This means that even though you can’t escape tax on the value of your subscription, as you won’t have to pay the National Insurance it will still work out a bit cheaper.
That’s a good start but is there any way to cut the cost by even more? In short, yes.
If you are able to treat your subscription as a tax-free benefit, you could enjoy serious savings. There are some rules around what types of recreation and sports facilities would quality to be treated as tax-free, namely:
- They must be available to all employees
- They must not be on domestic premises
- The facility must not be available to the general public
Is it possible to fulfil all of the above criteria for a fitness subscription? We’ve got some ideas about how to achieve it.
How to qualify for tax-free fitness subscriptions
With such specific eligibility around tax-free recreational subscriptions, you’ll need to think more creatively about how to achieve your fitness objective and still enjoy the savings.
Rather than a typical gym membership, you could consider these three options:
Hiring a personal trainer
In this scenario, the personal trainer becomes the tax-free sports “facility”. Assuming they put you through your paces twice a week at £30 per session, that equates to approximately £240 per month tax-free.
To make sure you remain compliant, the personal trainer must be available as an option to all employees and the sessions must not take place at your home.
Hire a health club
If there’s a group of you who are interested, you could get together and hire out a local health club for exclusive use 1-2 evenings per week. By excluding members of the public on those days you’ll ensure you’re meeting the required rules. And of course, you’ll have the benefit of not having such a long wait to use the equipment too!
Include a personal trainer in your remuneration
If you don’t want to make the facility widely available to all staff, an alternative is to include it in your own specific remuneration package. It will be tax-deductible as part of staffing costs for the company. Hiring a personal trainer works out cheaper for the company and for you, a great option that ticks every box.
How much could the savings be?
Before you start making arrangements, it’s worth pausing to check whether the savings that can be made are really worth the time. In this case, the answer is yes.
Here’s an example which highlights the potential savings that can be made:
Bob is a company director and wants to hire a personal trainer which is going to cost £600 per year. Bob pays higher rate tax so it would cost him £1034 of salary, with an expense to the company of £143 (National Insurance at 13.8% on the full salary sum). If the company pays for the service directly, NI is reduced to £83 (as it’s only payable on the cost of £600). Bob’s tax liability is reduced to £240 with no NI to pay.
The above rates are correct for England and Wales. In Scotland, different rates apply but the application of the principle is unchanged.
The company could also save Corporation Tax of 19% on this benefit in kind (net of VAT).
If the personal trainer facility is accessible to all employees or workers in your company, be it a single building or multiple, VAT can be recovered on the expense.
To get the maximum savings, the company would need to contract directly with the personal trainer, making it their liability.
Getting the paperwork right
When dealing with finances, you need to ensure everything is above board so that there can be no repercussions or the government thinking that you are trying to play the system in any way. In order to make sure everything is compliant and correct, a few brief procedures must be followed:
- The arrangement must be included in the company board minutes and put in writing to you with an amendment to your contract of employment
- The transactions must be listed in the company accounts and included with annual expenses and benefits reporting to HMRC, such as P11Ds
- The VAT-inclusive costs of a personal trainer must be included on your P11D (if you’re not fulfilling the clause which specifies it must be available to all employees)
- In the company accounts it should be listed as staff costs – this allows it to become tax-deductible
- The P11D benefit value should be included on your tax return
No need to sweat the small print
If it all sounds pretty complex, we can help here at Partner Accountancy. With a different approach to other accountancy firms, we genuinely care about your business. Get in touch with us today for a chat about the ways we could help.