Professional fees and subscriptions

By Tolley
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The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Professional fees and subscriptions
  • Tax and National Insurance treatment
  • Are the fees business-related?

Many employees are required to pay professional fees or subscriptions to trade bodies or institutes in order to carry out their jobs. An example of this might be solicitors who must pay for an annual practising certificate from the Solicitors Regulation Authority in order to practise.

In other cases, the professional fee or subscription may not be essential to the practice of the job, but may relate to the job. An example of this might be payment of subscription fees to the various accounting and tax professional bodies. Whilst you can still practise as a tax adviser or accountant without membership of such bodies, the subscription relates to the duties performed in the employment.

Many employers pay these fees on behalf of their employees. This is a taxable benefit in the hands of the employee, but they may be able to claim a deduction from their employment income depending on the circumstances (see below). If the employee would be able to claim such a deduction, then the employer’s payment of the fee or subscription comes within the exemption for expenses which would otherwise be deductible and there are no tax, NIC or reporting implications (see the Expenses and benefits matched by allowable deductions guidance note).

In other cases, the reporting of the benefit of the fee depends on the payment arrangements.

Tax and National Insurance treatment

Unless the payment of the fees or subscription comes within the exemption for expenses which would otherwise be deductible, it is a taxable benefit in the hands of the employee. The benefit is taxable as employment income in the hands of the employee. The amount of the benefit is the cost to the employer.

Regardless of whether the payment is exempt in the hands of the employee, the amount paid by the employer is deductible for the purposes of calculating the adjusted profits

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