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C was employed V plc throughout the tax year 2018/19.
In the tax year 2019/19, V plc provided C with free membership of its health club. The normal annual cost of the membership if £800. This figure is made up of direct costs of £150, fixed overhead cost of £400 and profit of £250. The budgeted membership for the year has been exceeded, but the health club has surplus capacity.
1. What is taxable benefit?
2. The answer is £150?
3. Why the whole cost of £800 is not a taxable benefit?
If the employer paid for the membership of a health club operated by a 3rd party then it would be the full cost of that membership as the assessable benefit. Where the health club is operated by the employer and is available for use by non employees then the only benefit is the marginal cost of providing that benefit.