Gym membership

[SandyD]

I got a new contract but its based in a super expensive area of London, and having to change my gym membership, can I put the the gym membership through the business expenses?
The location is quite far for me, so its not realistic for me to go to a local gym before or after work as I need to get up very early to get there and will be home quite late.

[eek]

I got a new contract but its based in a super expensive area of London, and having to change my gym membership, can I put the the gym membership through the business expenses?
The location is quite far for me, so its not realistic for me to go to a local gym before or after work as I need to get up very early to get there and will be home quite late.

No HTHBIDID

[Craig@Clarity]

Yes you can BUT......there will be a benefit in kind where the company will be charge Class 1A NIC (13.8%) on the gym amount (benefit value) in the tax year which is deductible for corporation tax relief.

You personally will also be taxed through self assessment at either 20%, 40% or if you're lucky, 50% on the gym amount too.

In most cases, where it's your own company, you're probably better off paying for it personally.

[SandyD]

Yes you can BUT......there will be a benefit in kind where the company will be charge Class 1A NIC (13.8%) on the gym amount (benefit value) in the tax year which is deductible for corporation tax relief.

You personally will also be taxed through self assessment at either 20%, 40% or if you're lucky, 50% on the gym amount too.

In most cases, where it's your own company, you're probably better off paying for it personally.

Thanks Craig, I know companies nowadays count employee benefits differently so they discount it from the employees salary before tax, hence the tax they pay is after all the discounts.. e.g.
If employee salary is 1000, and they opt for a gym benefit and health insurance lets say total of £200 a month, the company will discount the £200 from their salary before tax and they will be taxed on £800 earning not £1000 (i.e. as far as the HMRC is concerned their salary is £800 not £1000)...

Is there a way of doing the same ?

[northernladuk]

What a company pays it's staff and what is a taxable benefit are two completely different things.

If it is for personal use, pay it personally.

You do have an accountant don't you?

[psychocandy]

Thanks Craig, I know companies nowadays count employee benefits differently so they discount it from the employees salary before tax, hence the tax they pay is after all the discounts.. e.g.
If employee salary is 1000, and they opt for a gym benefit and health insurance lets say total of £200 a month, the company will discount the £200 from their salary before tax and they will be taxed on £800 earning not £1000 (i.e. as far as the HMRC is concerned their salary is £800 not £1000)...

Is there a way of doing the same ?

Sandy - you need to speak to your accountant and ask him to explain Benefit in Kind.

I think you will find that, even in permie world, if your employer provides you with anything it will be a benefit in kind. Basically, whatever it has cost you will be taxed on anyway.

Even if the employer, out of the goodness of their heart, paid this £200 for free, then you'd still be taxed on it as £200 income. Because you got it. No way around it.

Think about it - do you really think HMRC would let you get away with if you said employer pays me zero but pays my mortgage, car loan, car insurance, food bill etc. instead? They could but it'd all be classed as a BIK (although car is a little more complex).

There are a few things which dont attract BIK but not many and certainly not health insurance and gym membership.

[northernladuk]

You could also try using the search engine when asking for stuff like this. Chances are it has been asked plenty of times before...

https://www.google.co.uk/search?q=gy...hrome&ie=UTF-8

[SandyD]

Sandy - you need to speak to your accountant and ask him to explain Benefit in Kind.

I think you will find that, even in permie world, if your employer provides you with anything it will be a benefit in kind. Basically, whatever it has cost you will be taxed on anyway.

Even if the employer, out of the goodness of their heart, paid this £200 for free, then you'd still be taxed on it as £200 income. Because you got it. No way around it.

.

This was my understanding in the past, but recently in the permie world that has changed, and I saw several companies taking advantage of that, so instead of given an employee a basic salary + benefits, they have changed the model where all the benefits are taken out of the employee's salary before its taxed, hence the employees pays less tax as their salary would appear a lot less.

Yes I have an accountant, and will discuss it with him... but this is an Accounting Forum... if we are not allowed to ask accounting questions on it, then why bother have one?

[northernladuk]

This was my understanding in the past, but recently in the permie world that has changed, and I saw several companies taking advantage of that, so instead of given an employee a basic salary + benefits, they have changed the model where all the benefits are taken out of the employee's salary before its taxed, hence the employees pays less tax as their salary would appear a lot less.

Yes I have an accountant, and will discuss it with him... but this is an Accounting Forum... if we are not allowed to ask accounting questions on it, then why bother have one?

My last permie company did this. Introduced a flex benefits scheme with a catalogue of stuff from pet insurance to shopping vouchers. Problem was many of them were still cheaper if you shopped around and paid it post tax. The workforce went mad as well as it displayed your full income so rather than 30k+holidays+pension it displayed £50k and you had to buy your holidays and pension from that. People were furious because they wanted the £50k and didn't understand that holidays and pensions etc were a cost to the business. Right debarcle it was. Sometimes giving choice to masses is not a good idea. Thing is this affected your personal tax not the companies tax. They are too entirely different things.

[SandyD]

My last permie company did this. Introduced a flex benefits scheme with a catalogue of stuff from pet insurance to shopping vouchers. Problem was many of them were still cheaper if you shopped around and paid it post tax. The workforce went mad as well as it displayed your full income so rather than 30k+holidays+pension it displayed £50k and you had to buy your holidays and pension from that. People were furious because they wanted the £50k and didn't understand that holidays and pensions etc were a cost to the business. Right debarcle it was. Sometimes giving choice to masses is not a good idea. Thing is this affected your personal tax not the companies tax. They are too entirely different things.

Agreed, I had an offer from a permie recently with such offer, when I investigated further I found out some benefits they are offering are actually more expensive than if I shopped around myself, e.g. my own private health insurance is a lot cheaper even though comprehensive with a good insurance company than the one they claimed to offer at a good discount..

However, what I was wondering is if we could apply this model within our Ltd companies? And the benefits/liabilities.