We are asked the question “Is my gym membership a business expense ?” quite often, so we decided to write an article about it with clarifications as well as helpful information.
From the start, we have to make it clear this article is addressed to those business owners that are self-employed and not working through a limited company. (There are different rules that apply to limited companies and given the right set-up, because a limited company may be able to claim personal training as a business expense in order to save tax).
Can I claim my gym membership as a business expense ?
Sadly, the short answer to this question is “No. you cannot.” This is because HMRC considers a gym membership to be a personal expense rather than a business expense. As a general rule, sole traders (technically known as self-employed individuals) can only claim expenses that are wholly and exclusively for the purposes of their business.
Many of the things you buy in your business will be tax allowable, which means you can claim them as a business expense. This is because if you weren’t in business, you wouldn’t be buying them. For example, your business insurance is a business expense.
However, a gym membership benefits you outside of work, in your personal life, so it is not wholly and exclusively for the purposes of the business.
Duality of purpose
Expenses that have a business as well as a personal benefit are deemed by HMRC to have a duality of purpose. Where a clear portion of an expense can be proved as relating to business, like a computer, then an apportionment of the expense can be made and an amount claimed as an allowable business expense.
You must be able to show HMRC that a quantifiable part of the expense you want to claim as business expense meets the wholly and exclusively for business condition. However, it would be very difficult to convince HMRC about a clear apportionment of your gym membership.
Are there any exceptions ?
There are very few exceptions where the gym is seen as being necessary to your business. For example, if you work in a field that requires you to be in shape or if you are a personal trainer, then the gym membership is rightfully a business expense. This is because with respect to HMRC, it can be seen as a reasonable business expense.
Other occupations such as actors, models, ballet dancers, fitness instructors, athletes as well as similar professions can claim their gym membership as a business expense for justifiable reasons. If you fall into any of these professional categories, then by all means you should put the gym membership on the business expense list.
However, if your occupation or business is not one of these mentioned above, then a gym membership cannot be treated as a business expense.
What will happen if I pay for it through my business account?
If you pay for your gym membership through your business, then it will be classed as a benefit in kind and be taxable on your P11D (this is just a scy-fi term for a form to declare benefits you receive from the business to use, such as a business car or a room to live in above the shop, or anything in those lines). If your earnings and dividends are already high, then it would be more cost-effective for the cost of the gym membership to go to your directors’ loan account, where it would be included with your dividends.
Is there anything else I can do about it ?
Yes, there may be something you could do about it: if your monthly membership fee is less than £50, you could classify your gym membership as a trivial benefit. But remember, this is capped at a total value of £300 per year. For some business owners, this may be a beautiful gain as their taxable profit will be reduced by £300.
How can LAS Accounting help ?
LAS Accounting Ltd can help you with each and every one of your accounting needs, saving you time and money to focus on doing what you do best – running and growing your business. We can also help you understand your business finances, monitor your cash balances, plan for future tax liabilities and pinpoint trends to help support important business decisions.
Remember: the path to success is paved in tiny but meaningful steps. If you’d like help figuring out your business expenses, now may be the ideal time to engage the services of an accountant to do all the work for you and provide you with all the accounting advice you need.
Don’t hesitate to get in touch for any further enquiries at: firstname.lastname@example.org