Employers that want to keep their workforce fit and healthy have a number of options, and tax implications, to consider if they decide to offer gym membership as a perk, says Ben Jones
A healthy workforce is usually thought to be more productive. But 56% of Britons feel they cannot afford some of the costs associated with good health, such as gym membership, according to PruHealth’s Vitality Index survey published in April.
However, the Employee Benefits Research 2009, published last May, showed gym membership is now the most popular voluntary benefit, offered by 28% of employers surveyed. Clare Bettles, national corporate sales manager at David Lloyd Leisure, says there are two main reasons why gym membership has become popular with employers. “Employees are asking for it, and there are strong statistics to say it makes good business sense,” she explains.
Providing gym membership as a benefit can also help employers tackle issues such high sickness absence levels, or boost staff engagement and loyalty.
Employers that want to offer gym membership as a benefit have several options available. They can negotiate a discounted rate with a gym provider, pay the whole cost of membership for staff who want to join, or have an on-site facility for employees to use.
James Shillaker, director of provider Incorpore, says: “The fact we have healthier and fitter employees is a good thing. However, depending on what figures you read, between 30% and 50% of the UK workforce are still sedentary, meaning they get no exercise at all. The thing about gym membership is, it is not just an economic benefit, it is a people benefit as well.”
Perhaps the easiest way for employers to offer this benefit is to link up with an existing fitness company and offer membership to employees at a reduced corporate rate. This can be as simple as arranging for staff to be able to show a business card or payslip at a local gym to obtain the discounted rate. With this method, employers can take a relatively hands-off approach to managing the perk, because they will only need to cover the cost of communicating it to staff.
David Lloyd Leisure’s Bettles says: “We try to tailor our package so [the employer] gets a joining fee discount, free access to the whole David Lloyd estate, particularly if people are travelling, or a reduction in the monthly fee.”
Tax issues to consider
When deciding what form of gym membership to offer, benefits professionals should consider the tax issues surrounding the perk. For example, if they provide an onsite gym that is not open to the public, it is free from tax and national insurance contributions (NICs).
But staff will be liable to pay tax and NICs in cases where their employer initially covers the cost of gym membership, then reclaims his from the employee via salary deduction. The perk must also be reported under P11D.
Employers can also claim back value-added tax (VAT) at the end of the financial year if they cover the cost of offering the benefit.
Lesley Fidler, director, employer consulting group at accountancy firm Baker Tilly, says gym membership is a popular benefit from a tax perspective. “It has not got any awkward requirements,” she says. “Cycle-to-work schemes, for example, require bikes to be used mainly for commuting, whereas gym membership is open to everyone.”
What is corporate gym membership?
Employers that want to offer gym membership can negotiate discounts with national or local facilities, or set up an on-site gym. They can then decide how much cost, if any, to pass on to staff.
Where can I get more information?
For more on tax status, visit:http://www.hmrc.gov.uk/paye/exb/a-z/s/sports.htm
Who are the main providers?
David Lloyd Leisure, DW Sports Fitness, Esporta, Fitness First, Incorpore, LA Fitness, Livingwell, Nuffield Health, Virgin Active.