Can I pay gym membership through my limited company?

Many business-owners who like to keep fit wonder whether it's possible to pay for gym membership through their own limited company, to save money for both them and their employees. 

There are many factors to consider, in terms of whether you can do so – and if HMRC rules indicate you can, how exactly to go about it, writes Louise Rayner, founder of NumberMill Accounting. 

Let's find out if you as a limited company director can enjoy the benefits of a gym membership while leveraging your business expenses.

Understand business expenses

‘Business expenses’ as far as contractors are concerned are the costs incurred in the regular course of running a limited company.

These must meet HMRC’s requirements of being ‘wholly and exclusively’ for the purpose of the business.

While personal expenses are generally not considered allowable, certain exceptions exist. And gym membership fees are typically seen as personal expenditures, separate from company operations.

Gym membership as a business expense

In exceptional cases, gym membership expenses can be justified as legitimate business expenses if they have a direct connection to professional development or industry-specific requirements.

For the expense to be fully allowable, it must be considered ‘wholly, exclusively and necessary’ for business purposes.

Examples of which are as follows – as a director of the company claiming you are an:

• • Actor
• • Model
• • Personal Trainer
• • Athlete

It's advisable to consult with a qualified accountant or tax adviser to understand whether the gym membership would be fully allowable in your position and circumstances, even if you do fall into one of the above four occupational categories.

Gym membership tax implications with HMRC

If you can successfully justify gym membership expenses as a legitimate business expense, you may be able to claim tax relief on them.

This means that the cost can be deducted from your company's taxable profits, reducing your corporation tax liability. 

Alternative options: Benefit-in-Kind

If claiming gym membership expenses through your limited company is not considered allowable in your instance, you can explore the option of providing gym memberships as a Benefit-In-Kind (BIK) to yourself, or your employees. BIKs are non-cash benefits provided to employees and directors by the director’s company.

The provision of taxable benefits-in-kind is subject to reporting through an annual P11D. Each director or employee receiving a gym membership would have the value of their membership added to their total income and taxed on the basis as if it were typical salary income. The business would then need to pay Employer National Insurance at 13.8% of the total gym membership cost, for all employees and directors.

To ensure compliance with HMRC, it is essential to carefully consider the specific rules surrounding BIKs, which means seeking advice from an accountant or tax adviser. They can guide you through the HMRC reporting requirements and help you understand the potential tax implications for both yourself and your employees.

What about workplace wellness programs?

Another option is to focus on implementing workplace wellness programs within your company.

Instead of directly paying for gym memberships, you can invest in initiatives that promote health and wellbeing among your employees. These programs can include activities such as yoga or fitness classes, access to on-site fitness facilities, or the provision of healthy snacks and meals.

While the costs associated with workplace wellness programs are not considered allowable business expenses, they can still provide various indirect benefits.

And by promoting employee wellbeing, you create a healthier work environment, potentially boosting morale, reducing sick leave and increasing overall productivity. Additionally, certain costs associated with workplace wellness programs, such as health screenings or health-related training, may be deductible as allowable business expenses.

Can I pay gym membership through my limited company? The short answer…

Paying for personal gym memberships through your limited company is generally not allowable as for most contractors and professionals, it won’t meet HMRCs eligibility criteria.

However, there may be circumstances where gym membership expenses can be considered legitimate business expenses or provided as taxable benefits-in-kind.

It is crucial to seek professional advice from an accountant or tax adviser to ensure compliance with tax regulations – and to explore the best options available to you.

Alternative options, such as implementing workplace wellness programs or providing benefits in kind, can still promote health and wellbeing within your company. By prioritising the wellness of yourself and your employees, you can create a positive work environment that fosters productivity and supports a healthy lifestyle. And that can be as valuable as tax breaks!