Training and educating your staff is an essential part of operating any business but particularly a professional consultancy. A generous exemption is available to all corporates which removes any possible tax charge where the employer incurs expenditure on “work-related” training for it’s employees and also it’s Directors.
It does not matter whether the employer directly incurs the expenditure or it reimburses the employee’s expenditure, the exemption covers sums that would otherwise be taxable as earnings or as benefits.
Work Related Training and Education
Work-related training is defined as any training course or other activity which is designed to impart, instil, improve or reinforce any knowledge, skills, or personal qualities which:
- are, or are likely to prove, useful to the employee when performing his/her duties or
- will qualify or better qualify the employee to undertake the employment, or to participate in charitable or voluntary activities arising through the employment.
The training must relate to the employee’s current employment or to a related employment. As you can see this definition is wide and could capture many courses both long and short term.
- Costs which are incidental to the employee’s undertaking the training, for example incidental costs would include additional travel or child care costs made necessary by the training course, but not the routine everyday costs of travel or child care.
- Costs incurred in connection with an assessment of what the employee has gained from the training. This need not be by way of formal examination.
- The cost of obtaining for the employee any qualification, registration or award where entitlement is as a result of the training or assessment in question.
The term award is not limited to a certificate or citation. A memento of the course (such as a scarf, tie, or mascot) would also satisfy the term, as would some similar award of an asset which had a low likely re-sale value. Other awards made in recognition of, rather than as reward for, training achievement would also be acceptable.
- Exemption applies to both internal and external courses.
- Exemption covers the costs of the employer or those of a third party providing training.
- There is no territorial limitation on training location.
- Exemption extends to a broad range of training materials.
- Exemption extends to other related costs such as the cost of additional child care and the travelling and subsistence costs of the trainee.
- Exemption extends to training which is linked to charitable and voluntary activities.
- Exemption from tax is mirrored in a NIC exemption.
Are you claiming all the reliefs and exemptions available to you? We are specialist Contractor Accountants who pro actively work to ensure you only pay the tax which you are legally required.
Contact us today to discuss how we can help you.