Tax Relief on Training Repayment Costs

boliver228

Hi,

I left my company in September 2014 and was required to repay a lump sum (in the thousands) to cover training costs, as part of a scaled repayment clause in my employment contract. The training was in the form of a university degree, which was a compulsory element of the employment contract i.e. it was not a choice not to do the training, it was an inherent requirement of the employment contract.

In my employment contract it states that my company may withhold my salary to cover the training repayment costs, or alternatively I can pay it as a lump sum on the day I leave the company.

My question is, given that compulsory training which is wholly necessary for the job is tax deductible, should this repayment lump sum be treated as a gross deductible from my annual salary. Essentially, I just paid my company back my salary to cover the training costs. If I had asked them to withhold my salary to cover the costs, would this have reduced my gross pay for the year, meaning I would have paid less tax? Or would I have still had to pay tax?

Any advice appreciated.

martinsurrey

HMRC don't care about your contract.

http://www.nelsonslaw.co.uk/site/library/commercialclient/tax/making_training_costs_tax_deductible.html

the key are the terms

‘wholly, exclusively and necessarily incurred’

necessarily means you cant do the job without them (ignoring the contract term), not that it make you better at the job.

if they had held back salary from gross pay, you would have had a benefit in kind, and ended up paying the tax anyway.

boliver228

Well what makes training wholly, exclusively and necessary. The programme I was on was a degree programme, to produce future managers, and to progress onto a graduate programme. Hence the University management degree was wholly, exclusively and necessary for the employment. And yes, it would be a benefit in kind but cant some benefit in kinds can be tax deductible, for example the above training?

Caz3121

You will surely get the benefit of that education in your future career though
I would look at education that was "wholly, exclusively and necessary for the employment." to be something like training for operating complex bespoke machinery...cannot do the job without the training...being a manager without manager training does not mean you cannot do the job...having a degree is not a prerequisite of being able to be a manager. In the organisation I work in I am estimating it 50/50 for degrees in management

martinsurrey

boliver228 wrote: »

Well what makes training wholly, exclusively and necessary. The programme I was on was a degree programme, to produce future managers, and to progress onto a graduate programme. Hence the University management degree was wholly, exclusively and necessary for the employment. And yes, it would be a benefit in kind but cant some benefit in kinds can be tax deductible, for example the above training?

future managers

progress onto

NOT necessary for the job you are doing, so not tax deductible.

the kinds of training that are tax deductible are things like update courses for gas engineers, without them they cannot legally do their jobs.

sorry, but you wont get anything

MacMickster

The training was not done in the performance of the duties of your job. It merely put you in the position to be able to do the job. Not allowable I'm afraid.