Staff training and courses

Produced by Tolley in association with Philip Rutherford

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

  • Staff training and courses
  • Exemptions
  • Work-related training
  • Help to Grow: Management
  • Costs incidental to the training
  • Third party costs
  • Excluded costs
  • Where an employee meets the costs of training
  • Pre-employment training
  • Retraining
  • More...

Staff training and courses

Staff training and courses are a common benefit provided by employers to their staff. There are various reliefs available for the costs associated with staff training.

Exemptions

A number of exemptions from tax and NIC for work-related training are provided by ITEPA 2003, ss 250–254.

ITEPA 2003, s 250 provides an exemption for both the costs of work-related training as well as other related costs. Where the exemption applies, it does not matter if the employer meets the expenditure or the employee pays and is reimbursed for it by his employer:

  1. the training can be either internal or external training, there is no territorial limit to the training location

  2. the exemption includes both the employer’s costs and any third party costs

  3. it covers the training materials associated with the training

  4. the exemption includes travel and subsistence costs, additional childcare costs and other incidental costs

ITEPA 2003, ss 250–260; SI 2001/1004, Sch 3, Part VII, para 2

This exemption does not give employees tax relief for the costs of self-financed training where the cost of the training is not reimbursed by the employer.

HMRC guidance is at EIM01210 onwards and see Simon’s Taxes E4.711.

Work-related training

Work-related training is defined as any course or activity which is designed to impart, instil, improve or reinforce any knowledge, skills or personal qualities which:

  1. are, or are likely, to prove useful to the employee when performing his duties

  2. will qualify or better qualify the employee to undertake the employment, or to participate in charitable or voluntary activities arising through the employment

ITEPA 2003, s 251

The training should relate to the employee’s current employment or a related employment. For example, sending a finance person on an HR course is likely to be questioned by HMRC. Related employments are defined as another employment with the same employer, or connected with them, which the employee:

  1. is to hold

  2. has a serious opportunity of holding

  3. can realistically expect to have serious opportunity of holding in due course

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