The New Year is typically a month for planning ahead and focussing on our health. The gym is always busier, and the pubs and restaurants are quieter. But are there any tax savings available that can help shed the pounds?
Self-Employed
Unfortunately, the costs of a gym membership, sports clothing, or buying your own gym equipment are not going to be tax-deductible, even for the self-employed who typically have more flexibility in terms of allowable expenses.
The exception to this could be if you work in fitness (personal trainers, influencers, coaches, etc.). If the costs or equipment are used as part of your business, then a deduction may be possible, although an allocation may need to be made for personal use.
Employees
There is more scope for tax savings for employees, where the employer provides benefits related to health and fitness. Business owners who operate through a limited company might consider whether use could be made of any of the following examples for the business owner and staff:
- On-site gym – providedit’savailable to all employees and not open to the public, it will not be a benefit-in-kind for the employees. The business owner might even club together with other employers to share the facilities with their staff, too.
- Cycle to work scheme – if you provide your employees with a bike, even an electric bike, this is not taxable on them and istaxdeductiblefor the employer. Note that the bike must be used mainly for employment purposes, but this can include commuting to and from work. The exemption also extends to most cycling accessories (clothing, bags, and safety equipment, etc.), and can be provided under a salary sacrifice arrangement (one of the few benefits that are still efficient following the introduction of the optional remuneration rules in 2017).
- Welfare counselling and health assessments – Welfare counselling must be available to all employees, and health assessments are limited to one per year. Provided these rules are met, there is no tax for the employee.
- Annual events – it might feel a bit early to be thinking about the Christmas party, but the £150 per head limit applies to all annual events. So, a January ‘detox retreat’ could qualify. The £150 limit applies to all annual events, and if you breach it, the entire cost for that event is taxable, so do themathscarefully.
- Healthy snacks – placing healthy food choices like fruit bowls around the office is also exempt from tax, provided they are available to all staff and are not overly lavish.
As well as the above, there is the general exemption for trivial benefits of up to £50 per gift. So, a wellness box or a voucher for the local spin class should be okay. Remember that the exemption is limited to £300 in aggregate each year for directors of close companies or members of their family.
VAT and the Sugar Tax
There are a number of VAT savings for healthy living, although simply switching from chocolate biscuits and ice-cream (standard rated at 20%) to cake and frozen yoghurt (zero-rated at 0%) is unlikely to help with the waistline!
Food is usually zero-rated, whereas food from a restaurant is standard-rated. So, eating out less and cooking at home reduces the VAT you are paying. In addition, certain diet foods (meal replacement products, including drinks – although not sports drinks) are also zero-rated.
The soft drinks industry levy (commonly known as the sugar tax) applies to sugary drinks, so switching these for lower sugar alternatives also reduces the tax you pay.
Practical Tip
As we embark on another January of health and fitness, don’t forget the tax savings you might be generating. Hopefully, these incentivise you to keep going to reach your goals!