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Any Answers Answered: Gym memberships and extending year-ends

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TAXtv’s Giles Mooney and Tim Good tackle two questions from the pages of Any Answers. The first looks at putting a gym membership through the company as a BIK, while the second asks about extending a year-end to allow for further employer pension contributions.

2nd May 2024
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To view the full questions and AccountingWEB readers’ answers click on the links below. To watch the video, click the play icon in the box above.

Gym memberships: BIK or pay personally?

The first question came from accountinggeek1, who was looking for advice on whether a client of theirs should put their family gym membership of £472 a month through the business as a benefit in kind (BIK).

The reader said they would “generally advise against this” but was “trying to analyse whether it would be disadvantageous”, with the other option being to extract and pay it personally.

Good noted that it “doesn’t make a huge amount of difference”.

“I’m a great believer in this sort of situation in keeping it simple,” he said. “If you can afford to, pay the family gym membership. “The admin side of it - particularly bearing in mind that BIKs are going to be payrolled from April 2026 - might just persuade us to keep it out of the company.

“If you need the money, take a dividend and that would be the end of that.”

Year-end extension for employer pension contributions

The second question came from neildsimpson, who asked about extending the year-end to allow another further employer pension contributions in the next financial year.

They said that while most of their company profit goes into employer pension contributions, this year they’ve been “fortunate enough to make more than £60,000, so it won't all go in - I have used the three previous year’s allowances and there is no one else's allowance to use”.

“My year-end is the end of October - if I extend it to the end of April, could I make further contributions in April and therefore reduce my CT bill?”

Good said that the accounting year-end for the company “is not the key factor here - it’s the tax year”, before discussing the annual allowance and stressing that while a £60,000 contribution may have already been made, there’s “nothing to stop them, now, in May 2024 making another £60,000 contribution”.

“So within the same accounting period, you could have £120,000 because it’s all to do with the tax year.”

He added that there are other factors to consider, including making sure the £60,000 doesn’t generate an excess charge and whether HMRC might want to question if £120,000 in one accounting period “is allowable as being incurred wholly and exclusively for the purpose of the company’s trade”.

For the latest episode of TAXtv visit PTP Interactive.​ TAXtv is a monthly tax update programme available as an annual subscription (11 issues plus budget editions) to view online, download from the internet or watch on DVD.

Replies (2)

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By Paul Crowley
04th May 2024 22:25

Much appreciated.

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By rjaustin
21st May 2024 09:38

Thank you!
Always enjoy passively (let someone else do the heavylifting?!) revising this stuff!

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