OU Degree - valid business expense
Discussion
Afternoon,
I am the director of a limited company that I use to do software development contract work. I want to study and OU degree in theoretical physics and want to pay for it out of my company. My main motivation for doing the degree is that I find the subject interesting and I guess potentially the degree could assist me in finding work although I suspect that the degree would be a differentiator in terms of candiate selection rather than being necessary as such. I already have a degree in computer science.
Are my OU fees a valid business expense and will they be seen as a benefit in kind. Anyone got any experience of this?
Thanks,
Mark
I am the director of a limited company that I use to do software development contract work. I want to study and OU degree in theoretical physics and want to pay for it out of my company. My main motivation for doing the degree is that I find the subject interesting and I guess potentially the degree could assist me in finding work although I suspect that the degree would be a differentiator in terms of candiate selection rather than being necessary as such. I already have a degree in computer science.
Are my OU fees a valid business expense and will they be seen as a benefit in kind. Anyone got any experience of this?
Thanks,
Mark
Right, I'll answer this myself as I've subsequently found the answer and I guess it might be useful to someone.
Having spoken to my accountant and the OU I can apparently pay for the courses through my limited company. I sign up for a course and then receive a sponsorship form with the course. I fill this in as the student and get my company sec to sign it on behalf of the company. The OU then invoice my company directly rather than me.
Cheers,
Mark
Having spoken to my accountant and the OU I can apparently pay for the courses through my limited company. I sign up for a course and then receive a sponsorship form with the course. I fill this in as the student and get my company sec to sign it on behalf of the company. The OU then invoice my company directly rather than me.
Cheers,
Mark
Does the expense pass the "wholly and exclusively" for the purpose of the trade test? My guess is that it doesn't - and therefore is not an allowable business expense.
If you DO manage to squeeze the fee through the accounts and claim the cost against the business' tax liability, is there not a Benefit in Kind matter arising on the Director?
Education costs of a director are usually NOT allowable.
If you DO manage to squeeze the fee through the accounts and claim the cost against the business' tax liability, is there not a Benefit in Kind matter arising on the Director?
Education costs of a director are usually NOT allowable.
Eric Mc said:
Does the expense pass the "wholly and exclusively" for the purpose of the trade test? My guess is that it doesn't - and therefore is not an allowable business expense.
If you DO manage to squeeze the fee through the accounts and claim the cost against the business' tax liability, is there not a Benefit in Kind matter arising on the Director?
Education costs of a director are usually NOT allowable.
I'm with Eric. If your degree was directly related to you work, then I still think it would look suspicious. However, I don't think there's any problem with a week's training course so long as it's related to your line of work.If you DO manage to squeeze the fee through the accounts and claim the cost against the business' tax liability, is there not a Benefit in Kind matter arising on the Director?
Education costs of a director are usually NOT allowable.
What heading is your accountant going to disguise it under on your accounts?
I appreciate what you're all saying but I trust my accountant in the matter. He's not one for allowing much through and I trust him so if he says it's ok then I'll put it through. I don't know how it'll be listed but I'll ask him when the time comes.
At the end of the day if the revenue question it then I'll just have to pay it back which is not an issue and I don't abuse the system so would not be concerned for my accounts to be scrutinised.
Cheers,
Mark
At the end of the day if the revenue question it then I'll just have to pay it back which is not an issue and I don't abuse the system so would not be concerned for my accounts to be scrutinised.
Cheers,
Mark
Edited by dern on Tuesday 4th December 19:47
Em, that's abit like letting the burglar in and hoping he'll only take stuff you're not bothered about. I'd say it is a fairly high risk strategy.
To be fair, if the course costs are in the low £hundreds, they will probably pass through with no scrutiny. However, if they are in the £thousands, you would really be taking a major gamble with the Revenue and risking a large tax payment. If the claims were over a number of years, the tax due would be greater of course and would be compounded by interest and possibly penalties.
To be fair, if the course costs are in the low £hundreds, they will probably pass through with no scrutiny. However, if they are in the £thousands, you would really be taking a major gamble with the Revenue and risking a large tax payment. If the claims were over a number of years, the tax due would be greater of course and would be compounded by interest and possibly penalties.
Deva Link said:
It's always good to give them a couple of things to find, though - they can go away feeling pleased with themselves.
Er no, once they start digging, they won't stop. I agree 100% with Eric Mc on this.If they do find "something" then they're more likely to think that there's a whole raft of things to be found..
Aranell said:
My Masters degree is paid through my company as training and my accountant seems happy with this.
My original degree was loosely related to what I do but I felt I should train in the subject a little more and the closest fit course was this Masters course
My MSc was partly paid for by the company i work for, but was thinking of claiming tax relief on the remainder but thinking its not really worth it!My original degree was loosely related to what I do but I felt I should train in the subject a little more and the closest fit course was this Masters course
Eric Mc said:
Are you an employee?
If so, you have no chance. The test for tac relief on expenses is MUCH tougher for employees compared to a business.
Yep i am now an employee! But i am claiming tax relief for professional instatusiotns etc which seem soto be accepted but saying that its only £50 per year!If so, you have no chance. The test for tac relief on expenses is MUCH tougher for employees compared to a business.
But what if the previous company wants you to pay back the student fees to them as you leave within a certain cooling off period
Edited by stevieb on Wednesday 5th December 15:46
There is no general tax relief on education costs for employees.
Otherwise, every student would try to recover tax relief on their education costs once they started work.
If your employer has subsidised your education costs but states that you must refund these costs to them if you leave before a specified date, then you end up bearing the brunt of that cost. In other words, it is no different to a person paying for their own courses - on which tax relief is not available.
Generally, professional subscriptions ARE claimable by an employee BUT ONLY IF THE SUBSCRIPTION IS TO A BODY THAT YOUR EMPLOYER REQUIRES YOU TO BE A MEMBER OF.
Otherwise, every student would try to recover tax relief on their education costs once they started work.
If your employer has subsidised your education costs but states that you must refund these costs to them if you leave before a specified date, then you end up bearing the brunt of that cost. In other words, it is no different to a person paying for their own courses - on which tax relief is not available.
Generally, professional subscriptions ARE claimable by an employee BUT ONLY IF THE SUBSCRIPTION IS TO A BODY THAT YOUR EMPLOYER REQUIRES YOU TO BE A MEMBER OF.
Edited by Eric Mc on Wednesday 5th December 16:00
That sounds fine.
The test for employee expenses is tougher than for self-employed/business expenses.
Employees must have incurred the expense "wholly, exclusively AND NECESSARILLY in the course of their employment".
Business costs need only be "wholly and exclusively for the purpose of the trade".
The test for employee expenses is tougher than for self-employed/business expenses.
Employees must have incurred the expense "wholly, exclusively AND NECESSARILLY in the course of their employment".
Business costs need only be "wholly and exclusively for the purpose of the trade".
Edited by Eric Mc on Wednesday 5th December 16:32
Eric Mc said:
Em, that's abit like letting the burglar in and hoping he'll only take stuff you're not bothered about. I'd say it is a fairly high risk strategy.
That is a standard defence strategy though. If you're on foot in a dodgy area, it's recommended you keep some cash separate to hand over to muggers, hopefully protecting the bulk of your cash & cards.Mrs DL used to work for the Contributions Agency, and then HMRC, and she regularly did compliance surveys (although she wasn't Inspector level) so I have some idea how they think. Don't be too obvious though - that really does set alarm bells ringing.
I think everyone involved in any kind of inspection work likes to dig until they find something. Ever had a BS/ISO9000 inspection?
These days there are very few simple compliance visits. The Revenue tend to single out a business for inspection based on a "risk" approach or because something doesn't look quite right in a set of accounts or a tax/VAT Return.
What you don't want to do is trigger a tax/VAT Investigation because of an over-enthuisiastic "Training Costs" claim.
What you don't want to do is trigger a tax/VAT Investigation because of an over-enthuisiastic "Training Costs" claim.
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