Save VAT on your Membership Fees

Saving VAT on Membership Fees

Gyms and health clubs may be able to reclaim thousands of pounds worth of VAT on their current membership offering.

How the process works

If you are a Gym or Health club and offer two payment options for a single membership then you may be able to reclaim VAT on the difference in cost between the two payment options.
For example, if we take a 12-month contract, you may offer one or two months free to those who pay in a lump sum, making this option cheaper. The difference between the sum totals is then interpreted as interest on a grant of credit. Legislation then stipulates that the output VAT on this difference is exempt from VAT.

Does your club qualify

It all depends how your membership works, but if you meet the below two criteria, you are eligible:

  • You offer two methods of payment to your members for the same membership option. Often this is either a monthly deferred payment or a lump sum payment.
  • The sum of the monthly deferred payments and the lump sum payments is different.

Note: ‘Pay As You Go’ memberships do not qualify as the membership contract does not stipulate a fixed term contract period.

Conclusion

Any club that offers two different options at two different prices is eligible to save VAT. It does not matter how these differences are marketed, for example ‘One month free when you sign up for a 12-month contract’. All that matters is that the difference is stipulated, usually via the Terms & Conditions or a Price Sheet,
If your club is eligible, it is possible to reclaim VAT from the previous four years.
If you believe you qualify and would like to claim VAT back, contact lee.manning@raffingers.co.uk.
Read our Factsheet