University fees and tax
Discussion
I am currently doing an MBA and self funding. I know a few others on the course that are doing this. Someone said yesterday that you can put the course fees down as an allowable expense because it is enhancing your current skills. If thats the case then that is a considerable benefit on a 20k fee. My question though is that if you are not self employed and are paying PAYE is there any way of doing the same in terms of claiming some of your tax back to soften the blow?
Yeah I am. The self employed people seem to think that it is as long as it can be shown that it is enhancing your current skills rather than providing new ones and i just wondered if there was anything you could do to soften the blow if you are PAYE.
How about this?
http://www.leeds.ac.uk/arts/download/1490/salary_s...
How about this?
http://www.leeds.ac.uk/arts/download/1490/salary_s...
Edited by craigjm on Saturday 15th March 13:27
The rules for claiming costs against your income are different for self employed people compared to employees.
For a self employed individual, the expense only has to be "wholly and exclusively for the purpose of the trade".
For an employee the expense has to be incurred "wholly, exclusively and NECESSARILLY in the course of the employment".
Th word NECESSARILLY makes a big difference and makes any costs much harder for employees to claim compared to someone running their own business.
In reality, HMRC will still only allow self employed individuals to claim education costs IF the costs are
modest
and
part of ongoing professional training related to the business
A self employed individual CAN NOT make a claim for education fees when they are studying for a professional qualification - even if they intend to use that qualification to enhance their business.
If that was the case self employed doctors, dentists, pilots etc would be offsetting their original degree and professional qualification costs against their income - which is something they cannot do.
So, as a self employed accountant, I can offset CPD and CPE costs each year against my business income, but I would not be able to offset any costs I incurred to improve my qualifications - such as taking an NBA course or deciding that I fancied becoming a member of the Chartered Institute of Taxation.
For a self employed individual, the expense only has to be "wholly and exclusively for the purpose of the trade".
For an employee the expense has to be incurred "wholly, exclusively and NECESSARILLY in the course of the employment".
Th word NECESSARILLY makes a big difference and makes any costs much harder for employees to claim compared to someone running their own business.
In reality, HMRC will still only allow self employed individuals to claim education costs IF the costs are
modest
and
part of ongoing professional training related to the business
A self employed individual CAN NOT make a claim for education fees when they are studying for a professional qualification - even if they intend to use that qualification to enhance their business.
If that was the case self employed doctors, dentists, pilots etc would be offsetting their original degree and professional qualification costs against their income - which is something they cannot do.
So, as a self employed accountant, I can offset CPD and CPE costs each year against my business income, but I would not be able to offset any costs I incurred to improve my qualifications - such as taking an NBA course or deciding that I fancied becoming a member of the Chartered Institute of Taxation.
Salary Sacrifice is not the same as claiming an expense.
In this case the EMPLOYER reduces your salary - so, obviously, you pay less tax because your salary is lower.
The EMPLOYER then pays the fee on your behalf.
Depending on the nature of the training and how it relates to the EMPLOYER'S business, the EMPLOYER might be able to get a reduction in teh tax calculated on their business profits.
If the employer is paying these fees on your behalf, HMRC might very well want to charge a Benefit in Lind tax charge on the value of the annual course fees.
In this case the EMPLOYER reduces your salary - so, obviously, you pay less tax because your salary is lower.
The EMPLOYER then pays the fee on your behalf.
Depending on the nature of the training and how it relates to the EMPLOYER'S business, the EMPLOYER might be able to get a reduction in teh tax calculated on their business profits.
If the employer is paying these fees on your behalf, HMRC might very well want to charge a Benefit in Lind tax charge on the value of the annual course fees.
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