Work-related training

Cash in on Work Related Training

Good news, employers may pay for a variety of training costs without triggering any tax liability for the employee(s) in question. In fact, the concept of "work-related training" is drawn so widely these days that it can encompass almost any activity that is not purely recreational.

HMRC is offering generous tax benefits against work-related training, whereby the employee receives work-related training tax free. The exemption covers sums that previously might have been taxable as earnings, as benefits, or under the vouchers rules. The exemption from tax applies equally to employees and office holders, and the location of the course is not relevant, it can be office-based or not; it can take place in the UK or abroad.

Remember, training must be directly related to the individual’s work: in statutory terms this means that work-related training tax-exemption can cover:

"All sorts of activities that aim to impart, foster, improve or reinforce a talent, particular skill-set or personal development that are helpful to the employee when performing the duties of the employment and also add value to their career."

The relief provided in this case extends to those skills that will qualify (or better qualify) the employee to perform those duties or a range of associated charitable or voluntary activities. Specifically, HMRC acknowledges that:

"Self-tuition packages, computer-based training, distance learning, work experience or work placement and informal teach-ins are all acceptable, as are more formal classroom-based methods. It does not matter whether training is delivered internally or externally, or on a part-time or full-time basis."

The training cost can also be reimbursed in most of the cases. Even if the invoice is in the name of an employee or office holder, the person can get the reimbursement by the company and these costs will not be considered as taxable amount. The cost of travel and subsistence can also be included if directly associated with the on-work training.

In case you have any doubts related to reimbursements, eligibility or have a query, you can contact DNS Accountants team, we’ll be more than happy to assist you in the same.

Our specialists can also advice you on whether your planned training courses are within the remit. There are few things that you should consider:

NOT ALLOWABLE

An IT consultant based out of London has a few French-speaking clients and believes that a course of evening classes in French will enable employees to converse more effectively and drive good results. Though in some cases this might be true, yet the IT consultant does not necessarily need to speak French in order to carry out his actual job as an IT consultant, therefore, the expense the training will be considered as taxable amount.

ALLOWABLE

If an IT consultant in London wants to attend a specific programme at Reading University to enrich his coding skills; in this case coding is directly related to the actual job role and, therefore, it will be considered as eligible under work-related training. His travel from London to Reading, accommodation and subsistence will also be non-taxable.

Isn’t that a really generous benefit the government is offering indeed, so if you are looking forward to improve your knowledge and enhance your skill-set with some work-related training, it’s better to join it through your company and save more on your taxes.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.