Tax relief on costs of professional exams?

[Brendan Burgess]

If an employer pays the costs of an employee studying for professional exams, they are allowed this as an ordinary trading expense.

But what if an employee pays them for themself? Can they claim a deduction? Or if a parent pays for a child to study accountancy at night?

I also seem to remember my employer giving me £500 tax-free for passing my final exams. Is this a common practice? Are there guidelines for it?

Brendan

 

[ClubMan]

For what it's worth I seem to recall there being a [broken link removed] on this - i.e. the tax treatment of certain fees that don't normally fall under the "tuition fees tax relief" scheme ([broken link removed]).

 

[Satanta]

I also seem to remember my employer giving me £500 tax-free for passing my final exams. Is this a common practice? Are there guidelines for it?

Not sure if it's common practice (or of any guidelines), but it is also offered by my employer.
(They also provide staff incentives such as Bursary during last year of study [some 2nd year students also offered this], Funding for work related thesis and bonus on completion of degree [only available to a 1.1]).

Tax free sums are given for additional educational courses (above the base degree - level 9 and above I believe and for some sector specific type of courses) and for gaining Chartership...
Only a certain threshold can be given over a five year period.

 

[Brendan Burgess]

Thanks ClubMan

From Revenue Briefing no. 39:

Examination Awards - tax treatment?

A cash award made to an employee in recognition of passing an
examination, or acquiring a qualification, which bears some
relationship to his/her duties, is regarded as not assessable, provided
that the award is of such amount that can, reasonably, be regarded as a
reimbursement of expenses likely to have been incurred in studying, and
sitting for the examination. Special increments of salary awarded
on passing an examination etc. are chargeable, as part of the employee.s
remuneration, in the normal way.

​

​

​

​

 

[ClubMan]

That's the one that I was thinking of alright. Looks like (a) reimbursement of expenses incurred (including professional fees etc.?) is not taxed as a BIK (b) any additional bonus for passing exams is taxable as income and (c) there's nothing to say that expenses incurred and paid for by the employee out of after tax income qualifies for any relief?

 

[Satanta]

(b) any additional bonus for passing exams is taxable as income

I would question (b) in relation to (a) above.
Without a clear definition of what expenses are "regarded as a reimbursement of expenses likely to have been incurred in studying, and sitting for the examination" an employer can/could give additional bonus' for the passing of exams.

I work for a very large multi national (whom I'd assume are extremely careful to remain tax compliant - or at least I'd hope) who often cover further education costs for employees (full course costs so little other costs would be incurred) and still reward the completion of such courses with tax free sums.

I'm not sure if these costs are intended to compensate for time off to study, possible loss of overtime etc. but it certainly seems to give a bypass of (b) as given above (as long as the bonus is not in the form of an increment in salary).
[FONT=&quot][/FONT]

 

[ClubMan]

Sorry - by additional bonus I meant:

Special increments of salary awarded
on passing an examination etc. are chargeable, as part of the employee.s
remuneration, in the normal way.

including a bonus paid by way of a temporary increment of salary.

 

[Billo]

Leaflet IT31 mentions Administration fees, Exam fees and Tuition fees, but AFAIK does not mention college Registration fees
Anyone know if college registration fees are allowable for tax.


Rgds
Billo

 

[Jockey]

Hi,

Tax relief is not allowed on registration fees. It is only allowed on Tuition fees paid to an approved college or university. I am doing professional accoutantcy exams myself but have been told that i can claim tax relief on these but if you read IT31 i would think not. I think the Revenue make it confusing so you wont claim for it. . . .

 

[Billo]

Thanks Jockey,

It is confusing all right. Some people say that registration fees are allowable, others say they are not allowable. I suppose then that it is better to claim, and see what happens.

Rgds

Billo

 

[da_id]

hi,

i am doing the law society's ppc1. it is an approved course, so that i can claim money back at the standard rate of tax

but i wont pay enough tax this year to make it worth my while.

Does anyone know if i get my parents to pay it and claim that i am reliant on them, can they claim it. if so, how can i prove that i am reliant.