As a business owner, you always look for ways to boost productivity, reduce stress, and enhance your team’s well-being. But what if I told you there’s a simple solution that could achieve all these things while benefiting your business’s bottom line? It’s not a new software or a fancy office perk. The secret is… your gym membership, and the positive impact it can have on your team’s health.
In the UK, more and more business owners realise the importance of fitness for success. After all, how can you lead a thriving business if you’re not in good shape, both mentally and physically? But there’s a coach, HMRC has specific rules about whether you can use your business to pay for gym memberships.
In this blog, we will explore how paying for gym memberships through your limited company can be a smart business move for your team’s health and your company’s finances. We’ll show you how to do it correctly, without triggering any red flags from the taxman. So let’s dive in and discover why fitness is not just a personal expense, it’s a key part of your business strategy.
WHY YOUR SWEAT SESSION IS YOUR BUSINESS SUCCESS
Gym memberships and regular exercise can do more for your business than you might think. Working not only benefits your health, you might assume that working not only benefits your health. But the truth is, exercise directly boosts your ability to perform in the business world too:
- Better Decision Making: Just 30 minutes of exercise can improve your decision-making abilities by 20%. When you make better decisions, your business runs more smoothly and effectively.
- Sharper Memory and Learning: Regular exercise increases your memory and learning capacity by up to 15%. So, the more you work out, the better your ability to learn new strategies and adapt to changes in your industry.
- Reduce Stress: Reports found exercise reduces stress by 40%. As a business owner, staying calm under pressure is crucial. The less stressed you are, the better you can lead and motivate your team.
Exercise is not just good for your body; it’s a performance booster for your business. Every gym session gives you a clearer mind, sharper focus, and increased energy to tackle those tough business challenges.
THE £57.4 BILLION REASON UK BUSINESSES CAN’T IGNORE EMPLOYEE HEALTH
In the UK, businesses lose £57.4 billion a year to workplace health issues. This figure covers everything from sick days to something less obvious but just as costly, presenteeism. This is when employees show up to work and are unproductive because of poor physical or mental health.
The result? More mistakes, lower customer satisfaction, higher staff turnover, and a weaker bottom line overall.
But here’s the good news: Businesses that invest in their employees’ health, such as through gym membership, see measurable productivity and overall performance improvements. Innovative companies understand that a healthy workforce is a more efficient, happier, and loyal one. Gym memberships are no longer just a perk but a vital business investment.
CAN YOUR LIMITED COMPANY LEGALLY PAY? THE CLEAN ANSWER
Many business owners wonder: Can my limited company pay for gym memberships? The short answer is yes, but with a condition. HMRC has clear guidelines about what constitutes a legitimate business expense. Here’s a quick breakdown:
ALLOWED WHEN:
- Membership is available to all employees, not just the directors.
- It’s part of a formal employee wellbeing package.
- The company can prove that fitness is essential for the business, for its employees working in physically demanding or high-stress environments.
NOT ALLOWED WHEN:
- Only directors enjoy gym membership.
- There is no clear link between gym memberships and business needs.
- It’s disguised as another expense to avoid tax.
The key takeaway here?HMRC won’t let you treat gym memberships as a personal perk, especially if only directors are benefiting. If you’re offering gym memberships through your company, it’s crucial to follow their guidelines to ensure they’re part of an overall employee wellness programme and are available to all staff. This will keep you on the right side of the taxman and give you peace of mind, knowing you’re operating within the law.
3 CLEVER WAYS TO STRUCTURE GYM BENEFITS
Just because gym memberships are a legitimate business expense doesn’t mean you have to break the bank. There are a few ways you can structure these benefits to stay compliant with HMRC, while making fitness an accessible option for your team:
1. THE FULL PACKAGE APPROACH
By including a gym membership in an employee benefits package, you may qualify for a trivial benefits exemption. This means that if the monthly cost is under £50, you can provide gym membership to your staff tax-free. This approach promotes employee wellness and helps you save on taxes, making it a great way to offer gym memberships without incurring additional costs.
2. THE SALARY SACRIFICE SCHEME
Under this scheme, employees “sacrifice” part of their salary for a gym membership. This saves them money on income tax and national insurance contributions, and it can also save your business on employer national insurance contributions.
3. THE HEALTH INSURANCE ADD-ON
Many corporate health insurance plans now offer discounts or cashback on gym corporate memberships. If you’re already offering health insurance as part of your employee benefits package, this could be a cost-effective way to provide a gym membership and save on tax at the same time.
WHAT HMRC LOOKS FOR
HMRC investigations are very specific regarding what qualifies as a legitimate business expense. Here’s what they’ll focus on:
- IS THIS TRULY A BUSINESS EXPENSE?
For example, paying for a personal trainer can be justified if it directly supports business performance. However, paying for a membership at a spa wouldn’t qualify, as it’s not directly related to work.
- IS EVERYONE TREATED EQUALLY?
This is a big one. If you provide gym memberships only to directors or senior staff, HMRC will likely view this as a personal perk rather than a legitimate business expense. To stay compliant, offer gym memberships to everyone in the business.
- CAN YOU PROVE THE BUSINESS NEED?
Documenting why fitness is essential for the company is crucial. For instance, a job that requires long hours or high levels of stress may benefit from employees having access to fitness facilities to improve their physical and mental health. You can support your claim by providing evidence such as employee feedback, productivity data, or industry research.
By keeping clear records, having a transparent policy, and being fair about who gets gym memberships, you’ll stay on the right side of HMRC. Remember, following their guidelines to ensure gym memberships are part of an overall employee wellness programme and are available to all staff, not just directors.
THE SMART BUSINESS OWNER’S FITNESS FORMULA
Even if your company can’t directly pay for gym memberships, there are still ways to incorporate fitness into your daily routine for improved performance:
- The 1% Rule
Investing just 1% of your profits in employee health could yield a massive return in productivity. A small investment in wellness can exponentially affect your team’s output. - The Meeting Hack
Instead of spending time in a coffee shop or conference room, replace some meetings with walking-and-talking sessions. It’s a great way to get the blood flowing while discussing business ideas. - The Tax-Deductible Alternative
If you’ve got fitness equipment in your office, that could be claimed as a business expense, saving you money in the long run.
READY TO UPGRADE YOUR BUSINESS PERFORMANCE?
If you’re in Greenwich, check out Meridian Fitness. We offer corporate packages tailored for busy professionals. With state-of-the-art facilities, flexible hours, and expert trainers, we’re the perfect partner to help you and your team improve fitness, reduce stress, and increase productivity.
FINAL THOUGHTS
In the business marathon, the fittest entrepreneurs don’t just survive. They lead the pack. Make fitness a part of your business strategy, and watch how it transforms your company. The road to success starts with a strong, healthy leader, so why not make the gym your next business move?
