Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.
What do HMRC consider to be a sporting or recreational expense?
If you as an employer pick up the costs for any recreational or sporting activities for your employees, you might need to report these costs to HMRC. As a result, there might be additional tax or National Insurance to pay.
When HMRC refers to sporting or recreational activities, they are including any sporting or recreational facilities you provide directly (for example, if you have a gym based at your work location) as well as any vouchers you provide which can be exchanged for sporting or recreational activities.
Are there any exemptions?
HMRC will consider the sporting or recreational expenses to be exempt as long as they meet all of the following conditions:
- If they are available for use by all your employees, not just a certain section of them
- If they aren’t available to the general public
- If they are used mainly by employees, former employees or employees’ family members. Members of employees’ households may also be able to use them (for example, nannies or au pairs). If you have grouped together with other companies to provide these facilities, their employees are also permitted to use them.
- If they are somewhere which isn’t considered to be a private home, holiday destination or any other overnight accommodation (this includes any associated sporting facilities, such as a hotel gym)
- If they don’t include the use of a mechanically propelled vehicle, including boats, aircraft and road vehicles.
If the sporting or recreational facilities meet all of the above conditions, they will be exempt from HMRC reporting requirements, so there won’t be any additional tax or National Insurance to pay on them.
If the sporting or recreational expenses form part of a salary sacrifice arrangement then they won’t be exempt even if they meet the above conditions and so will need to be reported to HMRC.
How to you report these expenses to HMRC and pay?
If the expenses can’t be classed as exempt, you need to report the cost of providing the facilities on the PD form for each employee who uses the facilities. You will also have to pay Class 1A National Insurance on the cost of providing these facilities. If you can’t calculate the cost of the benefit to you because it is too complicated to work out, you can contact HMRC for help. You can call them on 0300 200 3200 (textphone 0300 200 3212) quoting your employer reference number.
If the costs are part of a salary sacrifice arrangement and the amount of salary given up is greater than the cost of the sporting or recreational facilities, you need to report the salary amount to HMRC instead. This only applies to salary sacrifice arrangements made after 6th April 2017.
How can DSR Tax Claims?
We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful. Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.