The payment of a child’s school fees on behalf of an employee is an uncommon benefit. Unlike the provision of childcare, or the award of scholarships, there is no general exemption in place for the payment of school fees.
Introduction
The payment of school fees on behalf of an employee is treated as though the employer has settled a pecuniary liability of the employee. This determines the tax, NIC and reporting requirements associated with the payment. For further details on pecuniary liability, see the Contractual and pecuniary liabilities guidance note and Simon’s Taxes E4.420A.
Reimbursement of school fees
Employee pays the school fees and is reimbursed for these by the employer
The first example is where an employee pays for the school fees and the employer reimburses part of all of the fees in question.
In this case the amount reimbursed is treated as earnings.
Employee contracts with the school and the employer pays the fees
In this case, the employee enters a contract with the school directly and the employer pays either some or all
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