Club Membership & VAT

[Jemz0r]

Looking specifically at this:

https://www.gov.uk/expenses-and-bene...rship/overview

In the scenario where the Employer arranges and pays the fee directly, where does that leave the company as far as claiming the VAT back?

Thanks.

[Jessica@WhiteFieldTax]

What sort of club?

Vat will generally be deductible, but a notional output tax charge will be due on any private use which will probably negate any benefit.

See example of golf club membership:

https://www.gov.uk/hmrc-internal-man...t-tax/vit43700

TBH, for most small businesses separating private from business will be difficult, and you would be exposed.

[Jemz0r]

Thanks. This will be for private use of a local gym/golf club.

It looks to be an option under VIT25220 to have the business purchase the membership - which is seen as a legitimate business expense. But as it is wholly for private use then no VAT is recovered - which makes sense.

[WordIsBond]

Thanks. This will be for private use of a local gym/golf club.

It looks to be an option under VIT25220 to have the business purchase the membership - which is seen as a legitimate business expense. But as it is wholly for private use then no VAT is recovered - which makes sense.

Yes, you can pay it as a business expense, if your company arranges and pays it (rather than reimbursing you). It is a Benefit in Kind and has to be reported on P11D and Class 1A NI has to be paid. Income tax will be due personally.

This is tax efficient if your total non-dividend income is below the personal allowance, so that there is no income tax due on it. In that scenario, the only tax being paid is Class 1A NI. If you were paying it personally out of dividend income, you would be paying corporation tax plus dividend tax, which is higher.

It is probably not enough tax savings to be worth the hassle for most people, unless you also have other reasons you have to file P11D such as other Benefits in Kind (Private Medical Insurance, perhaps).