Can education be a business expense?

neilsedaka

The scenario is a computer hardware and software self-employed business partnership whose services included repairing computers and troubleshooting computer problems. The son of the two partners of the business gained a BSc (Hons) in Computing at Cambridge. The software side of the business was sold in 2008 to a third party. The son has started his own self-employed business and has taken over the hardware side of the original business, including many of the original clients.

Question - can education expenses such as university hall residence fees for the son be eligible as an income tax business expense for the original business?

Any thoughts much appreciated.

fengirl_2

Only if the son was an employee of the partnership. Then the fees, etc would be a benefit in kind assessable on the son because educational costs relating to learning a new skill are not allowable for tax purposes.

Andy_L

Are you sure about the benefit-in-kind? My last employer (MoD) paid for staff to do OU degrees & we were never taxed on it as a BIK.

olly300

Andy_L wrote: »

Are you sure about the benefit-in-kind? My last employer (MoD) paid for staff to do OU degrees & we were never taxed on it as a BIK.

Go to the HMRC website yourself if you don't believe fengirl or ask your accountant.

http://www.hmrc.gov.uk/paye/exb/index.htm

https://www.hmrc.gov.uk/guidance/480.pdf

fengirl_2

It could be that HMRC accepted that the OU degrees were enhancing your exitiing knowldge. Or, the MOD may have had an agreement whereby they paid the tax on the benefit.

olly300

fengirl wrote: »

It could be that HMRC accepted that the OU degrees were enhancing your exitiing knowldge. Or, the MOD may have had an agreement whereby they paid the tax on the benefit.

Everyone I know who has been or is currently in the armed forces has been allowed to train in something so they can get on in civilian life. So I think the MOD is an exception.

Other people I know who work for the public sector and have had qualifications sponsored/paid for can only do things that are relevant to their career. If it's not immediately obvious to management why the course/qualification is relevant and they can't come up with a good reason they don't get to do it.

Andy_L

fengirl wrote: »

It could be that HMRC accepted that the OU degrees were enhancing your exitiing knowldge. Or, the MOD may have had an agreement whereby they paid the tax on the benefit.

They tended to be vaguely related - not needed to do the job they were doing but, arguably, useful for career development/progression. eg an Engineer couldn't do Economics but could do a BEng/MEng whilst the reverse would apply for someone in a finance area