Produced by Tolley in association with Philip Rutherford
  • 22 Mar 2022 12:27

The following Employment Tax guidance note Produced by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • School fees
  • Introduction
  • Reimbursement of school fees
  • Employee pays the school fees and is reimbursed for these by the employer
  • Employee contracts with the school and the employer pays the fees
  • Employer contracts with the school and the employer pays the fees
  • Reporting requirements
  • Salary sacrifice

School fees

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.

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 of the fees on behalf of the employee. The amount paid by the employer gives rise to reporting requirements, and tax and NIC

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