Golf Membership - BiK
In the UK, whether a golf membership can be expensed in business accounts depends on several factors, primarily its use and the type of membership.
Personal Golf Membership
Personal golf memberships are generally not allowable business expenses. These are seen as personal expenses, and any attempt to claim them through the business would typically result in them being classified as a benefit in kind, which would attract personal tax liabilities without providing a corporation tax saving.
Corporate Golf Membership
Corporate golf memberships can be expensed under certain conditions:
1. Staff Benefit: If the membership is provided as a benefit to employees (including directors), it must be available to all staff. This kind of expense is fully deductible for corporation tax purposes. However, it is classified as a benefit in kind for the employees, meaning it would be subject to tax and National Insurance contributions.
2. Client Entertaining: If the membership is used solely for entertaining clients, it can be recorded in the business accounts as client entertaining. While this will reduce the reported profit, it will not reduce the corporation tax liability as such expenses are typically added back when calculating taxable profits.
3. Mixed Use: If the membership is used both for staff benefits and client entertaining, the costs should be apportioned accordingly. The portion related to employee use can be claimed as a business expense (with the associated benefit in kind tax implications), while the portion used for client entertaining is disallowed for corporation tax purposes.
For further details, you can refer to HMRC's official guidance on club membership expenses and benefits [here](https://www.gov.uk/expenses-and-benefits-club-membership).
If your company profits exceed £50k, then it may be worth while adding it to the company as the CORPORATION TAX will be higher than 19%, however basic rate tax is 20%, so the savings will be negligible when you take in the extra work that we need to do for the benefits side of things.
Example’s
Basic Rate Tax Payer (20%)
To calculate the Benefit in Kind (BIK) for a basic rate taxpayer at 20% for a value of £375, we can use the following steps:
1. Determine the taxable benefit amount: £375.
2. Apply the tax rate: Basic rate taxpayers are taxed at 20%.
The calculation would be:
BiK = Taxable benefit amount X Tax rate
BiK = £375 x 0.20
Bik = £75
So, a basic rate taxpayer at 20% would pay £75 in tax for a Benefit in Kind valued at £375.
Higher Rate Tax Payer (40%)
To calculate the Benefit in Kind (BIK) for a basic rate taxpayer at 40% for a value of £375, we can use the following steps:
1. Determine the taxable benefit amount: £375.
2. Apply the tax rate: Basic rate taxpayers are taxed at 40%.
The calculation would be:
BiK = Taxable benefit amount X Tax rate
BiK = £375 x 0.40
Bik = £150
So, a basic rate taxpayer at 40% would pay £150 in tax for a Benefit in Kind valued at £375.
Additional Rate Tax Payer (45%)
To calculate the Benefit in Kind (BIK) for a basic rate taxpayer at 45% for a value of £375, we can use the following steps:
1. Determine the taxable benefit amount: £375.
2. Apply the tax rate: Basic rate taxpayers are taxed at 45%.
The calculation would be:
BiK = Taxable benefit amount X Tax rate
BiK = £375 x 0.44
Bik = £168.75
So, a basic rate taxpayer at 45% would pay £168.75 in tax for a Benefit in Kind valued at £375.
The Benefit in Kind tax is taxed following your PAYE (Pay As You Earn) income, if you are close to the higher rate/additional rate tax bracket, part of your Benefit in Kind may fall into two tax brackets, this means a proportion will be taxed at the lower rate (20/40%) and the remaining will be taxed at the higher tax (40/45%)