P11D and Gym Membership

[WordIsBond]

Am I stupid, or is HMRC, or both?

Gym memberships for directors, have to be reported on P11D as a taxable BIK, right? I've read this like a million places (I even used Google).

But, where? Which category? There is NOTHING on the HMRC website that I can find that tells me on which line to report it. So, I called their employer "help" line. (My accountant is unavailable until tomorrow and I wanted to do this today.)

So the person I spoke to didn't know so went and asked one of the specialists. They told me to list it on "Payments made on behalf of the employee", and then under that, "Other". So I did, dutifully entered the amount like a good little lemming, and went to file the P11D(b). And it tells me that there is no Class 1A NIC due on the benefits I've reported. Well, that's not right, I know I have to pay NICs on it. So I call back and speak to a different person.

That person tells me to put it one place, then another place, then goes and asks one of the specialists, and tells me it's a cash gift and should be reported as fully taxable for both NIC and income tax. And that's not right, either. And also that it is required to be payrolled, which isn't right, and also not possible either for last year or for this year, since payrolling benefits is A) optional and B) has to be arranged before the start of the year.

So does anyone know where one reports gym memberships on the P11D so that the HMRC website actually shows it properly as a BIK with Class 1A NIC due?

[northernladuk]

Why don't you just pay it out of your own pocket?

And why aren't you asking your accountant?

[Louisa@InTouch]

Gym memberships would have Class 1A due.

The annual value of the membership should go into box M on the P11D.

This should then calculate the 13.8% for you due by your company. Then you will need to add the value of the membership onto your SATR as well.

Hope this helps!

[WordIsBond]

Thanks, Louisa, that helped, done and dusted.

@NLUK. I did mention why I hadn't asked my accountant in the OP. It's always a good idea to Google for answers before asking here, but it's also always a good idea to read the whole post before answering.

As to why I don't just pay it myself:
1. I offer it as a salary sacrifice employee benefit. In addition to my wife and I, I have two very part time people (retired guys who do small things for me occasionally) who take advantage of it. They don't make enough that I have to report it, so I only needed to report it for directors.
2. It's not a lot of money, but it is definitely more tax efficient. Because I have other employees, my employment allowance is used up by the NI for them, so my wife and I are both on a salary of £8060. (Probably a lot of other people here are on the same salary because they aren't eligible for employment allowance.) At a salary+benefit level between£8K & £11K, benefits in kind give a nice little tax savings. They are a company expense and so save 20% corporation tax, they incur no income tax (since below £11K), they incur no employee NI, and cost employer NI at 13.8%. Two annual gym memberships (for my wife and I) save nearly £100 in taxes when done through the company.
3. My gym gives a 10% discount to corporations. (They might not do this for a one-man band, don't know.)

So yes, it is worth it to do it through the company, especially now that I don't have to rely on HMRC to tell me which stupid box to put it in.

(Same applies to private medical insurance, BTW. If anyone is only on £8K salary, and they are buying private medical insurance or gym memberships personally, they should consider doing this through the company, unless they have significant outside income.)

[psychocandy]

Seems a lot of hassle mind. I guess for most of us if its BIK then its pointless paying via company.

[Darren at Fox-Bartfield]

BIK

If have a couple of employees on the same £8k salary and incur say £2k of BiK each then £248 in additional savings. Not a great deal but if your payroll software submits P11d's then not really much effort. Depends on personal preference.

Another way to look at it would be £50k in the bank for 12 months at an interest rate of 0.5% generates the same amount. Or, a full days work in a lot of cases.

[missinggreenfields]

If have a couple of employees on the same £8k salary and incur say £2k of BiK each then £248 in additional savings. Not a great deal but if your payroll software submits P11d's then not really much effort. Depends on personal preference.

Another way to look at it would be £50k in the bank for 12 months at an interest rate of 0.5% generates the same amount. Or, a full days work in a lot of cases.

INKSPE

[WordIsBond]

Seems a lot of hassle mind.

Gets my employees (and me) a discount on the membership. Encourages the employees to stay fit, which is always a good thing, especially with the older guys. And I guess I'm an older guy, too.

Another way to look at it would be £50k in the bank for 12 months at an interest rate of 0.5% generates the same amount.

Exactly. People will go to a lot of hassle to get a few tenths of a percent more interest, and then turn their nose up at this. I'm just using Basic PAYE tools, which doesn't handle it, but the online P11D filing is very easy. I'm doing it for the PMI anyway, so it is just knowing where to add this in, and next year I'll know.

Compared to the hoops some people tried to jump through to claim Employment Allowance so they could have a salary of £11K instead of £8K, it's pretty straightforward.

[WordIsBond]

If have a couple of employees on the same £8k salary and incur say £2k of BiK each then £248 in additional savings.

Oh, but I should add that this is wrong. I am not an accountant, but we must hold accountants to, well, to account, to get things right.

£4000 in BIKs reduces CT by £800. It costs £552 in employer NI. That's a savings of £248, so Darren is correct, right? No, because that £552 in employer NI reduces his CT by an additional £110.40. So actually, Darren saves £358.40. Nitpickers of the world, unite!

Also his employees save employee NI. And, Darren negotiates a discount with the gym and the insurance company, so it costs them less in salary sacrifice than they would pay buying it themselves. So they love Darren and will work for him at a reduced salary, saving him thousands a year, which is really dumb of them. As a result, Darren's employees have less to spend, the economy will tank, and people will blame it on Brexit. But really, it was just Darren and his BIKs.

It's possible I've been working too hard.

[Darren at Fox-Bartfield]

BiK

Very true WiB, there is the tax saving on the class 1a but can't put a price on good employee relations!

Not sure about the working too hard WiB, perhaps so hard can't go to the gym which your very generous employer has paid for out of his own hard earned cash!