Readers’ forum: Will free yoga lessons incur tax and National Insurance liabilities?

My employer client has decided to provide yoga classes for their employees. The classes will be held immediately after work hours for those who wish to attend. The lessons will be open to all employees and directors but attendance is purely voluntary. Depending on the numbers attending the employer may also open to lessons to the employees’ family members.

My question is whether there will be income tax and National Insurance liabilities on the lessons. The employer will pay the yoga teacher a fixed amount for each lesson but this is not linked to the number of attendees. Unless there is a tax advantage in doing so the employer does not plan to charge the employees (or relatives) for the lessons.

Can Taxation readers clarify the tax and National Insurance position here please if there is one? I understand that the cost of the lessons...