January is here and with that the same question we get asked every year from business owners:
“Can I put my gym membership through the company?”
A quick Google search will give you completely different answers — some saying it’s not allowed at all, others claiming it can be a tax-deductible job perk.
Let’s have a look at this in more detail.
The key rule: “wholly and exclusively”
For a cost to be allowable for tax, HMRC says it must be incurred wholly and exclusively for the purposes of the business.
This is where gym memberships usually fall down.
Even though:
- staying fit helps you focus
- you feel more productive
- you have a demanding job
HMRC sees gym membership as having a personal benefit, not a business one.
As a result, for most:
- sole traders
- partners
- company directors
A normal gym membership is not an allowable business expense.
What about claiming it as an employee benefit?
This is where a lot of online confusion comes from.
A company can pay for an employee’s gym membership — but it is not tax-free.
Instead, it is treated as a taxable benefit in kind, which means:
- The employee pays income tax on the cost of the membership
- The company pays Class 1A National Insurance
It’s probably useful at this stage to look at a real-life example with numbers.
Worked example: gym membership and dividends
Assumptions:
- Company profits before gym costs: £100,000
- Annual gym membership: £2,000
- Corporation tax rate: 25%
- Higher-rate dividend tax: 33.75%
- Employer Class 1A NIC on benefits: 15%
If the company pays for the gym membership
The gym membership is treated as a taxable benefit.
After corporation tax relief and employer NIC, the net cost to the company is around £1,725.
The director is taxed personally on the benefit:
- £2,000 × 40% = £800
Total combined cost: £2,525
If the director pays personally using dividends
To have £2,000 available after dividend tax, the company must declare a dividend of approximately £3,019 on which there would be personal tax payable of £1,019, leaving £2,000 cash in hand.
Total combined cost: £3,019
Final thoughts
For dividend-heavy companies:
- paying personally can be more expensive overall
- a company-paid gym membership can sometimes be less costly, even though it’s taxable
Paying personally is usually the cleanest and safest option — even if it doesn’t always feel the cheapest on paper.
However, if you’re looking at:
- improving wellbeing
- supporting staff
- or structuring benefits tax-efficiently
That’s always worth discussing properly, based on your numbers. Gym memberships are a classic example of an expense that feels like it should be allowable — but usually isn’t.
If you’re ever unsure, ask before claiming. It’s much easier than unpicking it later. Give us a call if this is something you’d like to do, so we can pick through your own numbers.