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A gym membership benefit in kind refers to a non-cash benefit provided by an employer, where the cost of a gym or fitness club membership is paid for on behalf of the employee. This is considered a taxable benefit by HMRC, as it offers personal value outside of normal salary or wages.
Gym membership benefit in kind is increasingly common as employers look to promote wellbeing. However, because the benefit offers a personal advantage, it must be reported and taxed appropriately. Typically, this value will appear on the employee's P11D form and is subject to income tax for the employee and Class 1A National Insurance Contributions (NICs) for the employer.
This guide provides everything you need to know about how gym memberships are treated for tax purposes, how they affect payroll, and what employers and employees should consider. This overview is ideal for anyone searching "what is gym membership benefit in kind" or related HMRC reporting queries.
Yes, in most cases, a gym membership paid for by an employer is treated as a taxable benefit in kind in the UK. HMRC considers this a personal benefit, not a business necessity, meaning it is subject to tax.
The employee will usually:
Have the value of the benefit added to their taxable income
Pay income tax on the benefit based on their tax band
Meanwhile, the employer must:
Report the benefit on a P11D form
Pay Class 1A National Insurance on the cost of the benefit
There are very few exemptions, and standard gym memberships typically do not qualify as tax-free unless they meet strict workplace-related criteria. Understanding the tax treatment early can help businesses avoid compliance issues and employees to manage their tax codes effectively.
When an employer provides a gym membership benefit in kind, both the employer and employee have tax responsibilities. The tax is not paid directly by the employee at the time of receiving the benefit, but rather it is reflected through adjustments to their tax code.
Employees pay income tax based on the value of the gym membership.
Employers pay Class 1A NICs (currently 13.8%) on the value of the benefit.
For employees, HMRC will adjust their PAYE tax code so that the correct amount of tax is collected throughout the year. For employers, the cost is calculated annually and submitted with their Class 1A NIC return.
This tax treatment applies even if the employee doesn’t actively use the membership—simply having access is considered a benefit. Understanding these responsibilities is crucial for staying compliant with HMRC regulations.
The taxable value of a gym membership benefit in kind is based on the actual cost to the employer. This includes any fees, subscriptions, or administration charges paid for the membership.
For example, if a business pays £600 per year for an employee’s gym membership, this full amount is considered the benefit’s value and must be reported.
Employers must:
Record the full cost of the benefit per employee
Include it in the annual P11D form
Use this value to calculate Class 1A NICs
There are no standardised rates or thresholds; the amount is determined by the real cost incurred. It's important that records are kept accurately in case of any HMRC queries or audits.
This straightforward calculation ensures that both employer and employee understand their tax liabilities from the outset.
Yes, receiving a gym membership benefit in kind affects the employee’s PAYE (Pay As You Earn) tax code. Since the benefit is considered taxable income, HMRC adjusts the employee's tax code to reflect the added value.
Here’s how it works:
The value of the gym membership is added to the employee’s annual earnings
HMRC reduces the employee’s personal allowance accordingly
This results in slightly more tax deducted from each payslip
Although this doesn’t mean a separate tax bill, it does reduce the amount of tax-free income the employee can earn. For employers, this change is automatic once the benefit is reported on a P11D.
Monitoring these adjustments ensures employees are taxed fairly, and that employers meet their reporting duties on time.
While most gym memberships provided by employers are taxable, HMRC allows for a few limited exemptions—but only under specific conditions. For a gym membership to be non-taxable, it must meet workplace-related criteria.
A gym benefit may be exempt if:
The facility is on the employer’s premises and available to all staff
The facility is not open to the general public
There is no charge for use of the facility
Standard gym memberships at third-party gyms (e.g. PureGym or Nuffield) do not qualify for this exemption and are taxable as a BIK for companies.
Employers should assess their gym offering against HMRC's exemption rules to determine if reporting is required. Getting this wrong could lead to unexpected tax bills and penalties.
Employers must report taxable gym membership benefits in kind on form P11D for each employee who receives the benefit. This should be submitted to HMRC after the end of the tax year, typically by 6 July.
Reporting steps include:
Calculating the exact value of the benefit
Recording the amount under the “Other benefits” or relevant section on the P11D
Including the value in the P11D(b) to account for Class 1A NICs
Accurate reporting is essential. Errors or late submissions can lead to HMRC penalties and interest charges. Employers should also provide a copy of the P11D to each affected employee for their records.
If your business offers gym memberships as a perk, ensure your payroll and finance teams are aware of their year-end reporting obligations.
The P11D form is used by employers to report taxable benefits in kind—like gym memberships—to HMRC. It lists all non-cash benefits provided to employees during the tax year and forms part of the year-end payroll process.
For gym membership benefits:
The full cost paid by the employer must be entered on the P11D
The employee receives a copy to understand how it affects their tax
HMRC uses this information to adjust tax codes accordingly
Employers must also submit a P11D(b), which calculates the total Class 1A National Insurance due. Keeping accurate records and submitting the form on time helps avoid unnecessary fines and ensures compliance with HMRC’s BIK rules.
P11Ds are crucial for managing all types of non-cash employee benefits—not just gym memberships.
When an employer provides a gym membership benefit in kind, they must pay Class 1A National Insurance Contributions (NICs) on the value of the benefit. This is currently charged at 13.8% of the total cost of the benefit provided.
Key points:
Only employers pay Class 1A NICs—not employees
It is calculated annually and paid after submitting the P11D(b)
Applies to all taxable BIKs, including gym memberships
This cost should be factored into budgeting for employee benefits. For example, a £500 annual gym membership would incur £69 in Class 1A NICs. Employers should ensure these amounts are reported correctly and paid to HMRC on time to avoid penalties.
Class 1A NICs are due by 22 July following the end of the tax year if paying electronically.
Salary sacrifice arrangements allow employees to give up part of their salary in exchange for a non-cash benefit. However, under HMRC’s Optional Remuneration Arrangements (OpRA) rules, gym memberships usually do not benefit from tax and NIC savings.
In most cases:
The benefit is taxed on the higher of the salary given up or the benefit’s cash value
This eliminates most of the tax advantages previously available
As a result, offering a gym membership through salary sacrifice will still result in a benefit in kind that is taxable.
Employers should assess whether offering gym memberships this way is worthwhile or if providing the benefit directly (and reporting it as a BIK) is more appropriate.
It's important to seek professional advice when setting up any salary sacrifice scheme involving taxable perks.
Yes, directors can receive gym membership as a benefit in kind, and it is subject to the same tax rules as for employees. The value of the membership must be declared on the director’s P11D form, and it will count as taxable income.
Directors should be aware:
The value of the gym membership is added to their taxable income
They will pay income tax through PAYE or Self Assessment
The company must pay Class 1A NICs on the value of the benefit
Incorporated businesses should also ensure the expense is wholly and exclusively for the benefit of the business to be allowable for corporation tax relief. Gym memberships, being for personal use, typically don’t qualify unless provided under strict workplace arrangements.
Careful planning and correct reporting are essential for directors to avoid unintentional tax liabilities. It’s advisable to consult with an accountant if you’re unsure.
Failing to report a gym membership benefit in kind accurately or on time can lead to HMRC penalties for both employers and employees. Errors can also result in underpaid tax and unexpected adjustments later on.
Potential consequences include:
Late filing penalties for missing the P11D or P11D(b) deadline
Interest and fines for unpaid Class 1A NICs
Tax code adjustments for employees to recover unpaid tax
HMRC enquiries or audits for non-compliance
For businesses, repeated failures to report properly can damage trust with HMRC and lead to further scrutiny. For employees, inaccuracies may impact future tax calculations or self-assessment returns.
To prevent these issues, ensure all BIKs are clearly tracked and reported within HMRC’s annual deadlines. Consider professional advice if you're unsure about treatment.
Yes, employees can decline a gym membership benefit in kind, particularly if they do not wish to incur the associated tax liability. It’s important to formally notify the employer, ideally in writing, to opt out of the benefit.
Reasons employees might opt out:
They already have a gym membership elsewhere
They don’t want the added taxable income
They are on a budget and want to maximise take-home pay
Employers should be transparent about the implications of accepting or refusing a benefit in kind. Once declined, the employer should ensure the benefit is not processed or reported to HMRC.
If a benefit is accepted but unused, it still counts as a taxable benefit—so decisions should be considered carefully. Employees should always confirm changes with HR or payroll to avoid incorrect tax code adjustments.
Any gym membership paid for by the employer that benefits the individual personally is considered a benefit in kind. This includes memberships to commercial gyms, health clubs, fitness studios, and boutique fitness centres.
Common examples include:
Monthly or annual gym subscriptions (e.g. PureGym, Nuffield, David Lloyd)
Corporate gym discounts where the employer covers all or part of the cost
Wellness packages that include gym access as part of broader health perks
Even if the membership is part of a wellness initiative, if it provides a personal benefit to the employee, it must be declared and taxed accordingly. Only facilities provided directly on business premises with exclusive employee use may be exempt.
Employers should carefully review how gym memberships are structured to determine tax liability. Understanding the scope of what qualifies helps avoid misclassification and reporting errors.
In some cases, employers may extend gym membership benefits to spouses or dependants of employees. While this can be a generous perk, it further complicates the benefit in kind calculation and reporting obligations.
Key considerations:
The total cost of membership for family members must be added to the employee’s taxable benefits
This value is reported on the employee’s P11D
The employee is responsible for paying tax on the combined benefit
For example, if the employer pays £500 for the employee’s gym and £300 for a partner, £800 is the taxable benefit.
Employers offering this type of benefit should inform staff of the full tax implications upfront. Transparency helps employees make informed decisions about accepting family-inclusive packages.
Gym membership benefits in kind can slightly reduce an employee’s take-home pay due to the way they impact income tax. Although the employee doesn’t pay for the gym membership directly, the value of the benefit is taxed as part of their income.
Here’s how it affects net pay:
HMRC reduces the employee’s personal tax allowance
More tax is collected through PAYE each month
The impact varies depending on the value of the benefit and the tax band
For example, a basic rate taxpayer receiving a £600 gym benefit could pay approximately £120 in additional annual tax.
While the overall tax effect is usually modest, it’s important employees understand that the perk is not entirely “free.” Employers should offer a breakdown of the tax impact as part of the onboarding or benefits process.
Some employers may offer to reimburse employees for their personal gym membership expenses rather than pay providers directly. While convenient, this approach does not change the tax treatment of the benefit.
Key facts:
Reimbursements are still classed as benefits in kind
The full amount reimbursed must be declared on the P11D
Class 1A NICs still apply for the employer
From a tax perspective, there is no advantage to reimbursing rather than paying directly. The value is considered the same and is subject to the same reporting obligations.
Employers should ensure reimbursements are clearly tracked and properly documented. Employees should retain proof of payment in case of audit queries or verification needs.
Offering a gym membership as a benefit in kind can be a valuable incentive for staff, especially in health-conscious workplaces. Despite being taxable, the perceived value of private gym access is often higher than the tax cost.
Advantages for employers:
Promotes employee wellbeing and reduces absenteeism
Boosts recruitment and staff retention
Reinforces company culture and employee support
Considerations include:
Budgeting for Class 1A NICs
Ensuring accurate BIK reporting
Communicating the tax implications to staff
For many businesses, gym memberships are a worthwhile investment when managed correctly. However, professional advice is recommended to align the benefit with broader payroll and tax strategies.
Managing gym membership benefit in kind reporting in-house comes with several risks, particularly for businesses without dedicated payroll or tax expertise. Mistakes can lead to HMRC scrutiny and unexpected financial liabilities.
Key risks include:
Incorrect benefit valuations leading to inaccurate reporting
Missed Class 1A NICs creating underpayments and fines
Late P11D submissions resulting in penalties
Employee disputes over incorrect PAYE tax code changes
Without specialist knowledge, it’s easy to overlook crucial compliance details. Errors can compound over time, especially if multiple benefits are offered across the workforce.
Businesses that want to offer employee perks while staying compliant should consider outsourcing benefit in kind reporting to qualified professionals.
At Pulse Accountants, we provide expert support for employers navigating the complexities of benefit in kind health and fitness perks, including gym memberships. Our service ensures full HMRC compliance while helping you manage cost-effectiveness.
We can help by:
Calculating and reporting BIK values accurately
Submitting P11D and P11D(b) forms on time
Managing PAYE code adjustments for employees
Advising on NICs and tax-efficient benefit structuring
Our team takes the hassle out of benefit reporting, freeing your HR and payroll teams to focus on other priorities. Whether you’re offering gym access as a standalone perk or as part of a broader wellness strategy, we make sure it’s implemented correctly.
Avoid the risks of DIY reporting. Contact Pulse Accountants for professional BIK compliance and peace of mind.
Pulse Accountants is trusted by businesses across the UK for accurate, proactive tax and payroll support. When it comes to gym membership benefits in kind, our knowledge ensures your reporting is not only compliant but also optimised for tax efficiency.
Why clients choose us:
Experienced in handling BIKs for small and medium-sized businesses
Clear, timely advice from dedicated tax professionals
End-to-end P11D and NIC compliance support
Flexible service tailored to your specific benefit schemes
We go beyond box-ticking. Our team ensures your employee benefits strategy aligns with your wider business goals and stays in line with ever-changing HMRC regulations.
For clear answers, consistent service, and reliable results, choose Pulse Accountants. Get in touch today to discuss your benefit in kind requirements.
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