Course Fees and Tax Relief

veryconfused20

Hi all, 

On going through the P87 online today (for the first time in my life; I have never believed that I need to utilise any HMRC forms as I'm just a basic employee with no "benefits" for want of a better word), it asked if I was claiming for any medical exams or course related fees.

I commenced my job back in 2016 and was contracted in a "student" position, with the view that the training completed throughout the fixed contract would lead to a permanent position. Part of this training included a year's university attendance, and subsequently I [contractually] had £300 deducted from my net pay per month to fund the university course. I made my final payment in January 2019, meaning in the 18/19 tax year (the only year left to potentially claim anything), I paid £3,000.

I recall specifically being advised by my employer's payroll department that those of us on these types of contracts were not eligible to claim any sort of relief, however now I'm wondering if this information was incorrect based on the criteria I read up on.

My issue if I was/am eligible for tax relief is that the amount of £3,000 exceeds that which I can claim through a P87, meaning I would need to submit a self assessment form. Due to the year I'd be claiming for, I'd almost certainly lose the entire amount I could reclaim in penalties for not having submit it "on time".

HMRC on calling earlier today stated they were unable to advise whether I could or couldn't claim for this relief, so my question is two fold I suppose...

- Anyone's interpretation of the criteria or experience of making this time of claim
- Even though I made 10 £300 payments in 18/19, in order to put it through a P87 could I just claim for 8 of those payments (£2,400) to keep it under the threshold, and will this decrease my chances of a successful claim because of the 'suspicious' nature of not claiming all 10?

I hope this makes sense and appreciate any help on the matter, thank you.

Dazed_and_C0nfused

My issue if I was/am eligible for tax relief is that the amount of £3,000 exceeds that which I can claim through a P87, meaning I would need to submit a self assessment form. Due to the year I'd be claiming for, I'd almost certainly lose the entire amount I could reclaim in penalties for not having submit it "on time".

How can you be penalised for not submitting a Self Assessment return on time if you haven't been issued with one in the first place 🤔

However I think the bigger question is why do you believe you could claim tax relief for these fees in the first place?

If they were necessary for you to do your job your employer would surely have paid them?

How much tax did you pay in that tax year?

Jeremy535897

When I first started my accountancy training in the dim and distant past, I had to fund my own training of £500 plus VAT. My boss then said to me that he would knock £100 a month off my gross pay for 5 months and he would pay the fees. He offered to do this because he could get tax relief on the cost of the course, because it was a training expense, but I could not, because training costs that put you in the position to do your job, as opposed to ongoing refresher courses, are not allowable if an employee pays them. He could also recover the VAT.

In your case, I would ask whether these fees are taken off your net pay, or your gross pay? The latter makes much more sense, and effectively means you have already had the equivalent of tax relief on the costs. If the former, it still doesn't help you as you have no basis on which to claim, but I would ask your employer why the costs reduce your net pay rather than your gross pay.

veryconfused20

Dazed_and_C0nfused said:

My issue if I was/am eligible for tax relief is that the amount of £3,000 exceeds that which I can claim through a P87, meaning I would need to submit a self assessment form. Due to the year I'd be claiming for, I'd almost certainly lose the entire amount I could reclaim in penalties for not having submit it "on time".

How can you be penalised for not submitting a Self Assessment return on time if you haven't been issued with one in the first place 🤔

However I think the bigger question is why do you believe you could claim tax relief for these fees in the first place?

If they were necessary for you to do your job your employer would surely have paid them?

How much tax did you pay in that tax year?

Until I went through the P87 I had no belief that I could. The question regarding course fees is phrased something along the lines of 'if you had to pay fees as part of your training in order to do your job', which was my position, and so I looked into it further. A website providing tax relief guidance stated this criteria...

• There is a mandatory requirement for external training that is inextricably linked to the terms of employment.
• If you do not successfully complete the training for the requisite qualifications then you will not be able to hold your current job; which you would have retained with the relevant training.
• Your whole job is part of the training process, with the intention that the practical and theoretical aspects combine to develop essential skills and knowledge.
• The external training in question is an intrinsic element of your employment contract.

All of this was applicable to the nature of the training I undertook and thus has led me to question my eligibility.

And no, my employer did not want to lose out on having to pay £9,000 university fees for thousands of employees and so put the onus of covering the cost onto us.

Without having an 18/19 payslip in front of me I can't tell you, but I'd estimate around £3,000 in that tax year based on my income. 

veryconfused20

Jeremy535897 said:

When I first started my accountancy training in the dim and distant past, I had to fund my own training of £500 plus VAT. My boss then said to me that he would knock £100 a month off my gross pay for 5 months and he would pay the fees. He offered to do this because he could get tax relief on the cost of the course, because it was a training expense, but I could not, because training costs that put you in the position to do your job, as opposed to ongoing refresher courses, are not allowable if an employee pays them. He could also recover the VAT.

In your case, I would ask whether these fees are taken off your net pay, or your gross pay? The latter makes much more sense, and effectively means you have already had the equivalent of tax relief on the costs. If the former, it still doesn't help you as you have no basis on which to claim, but I would ask your employer why the costs reduce your net pay rather than your gross pay.

They were taken off of my net pay, I definitely had no tax/NI relief. My employer would not elaborate on the agreement other than "that's what was decided" when asked at the time. It's the NHS so decisions aren't exactly made at individual trust level.

Lola_balola

It might be helpful if you could tell us what the course was. 

I know doctors can claim relief on certain exam fees but not for the courses that prepare them for those exams. 

You might find this link helpful https://www.gov.uk/tax-relief-for-employees/professional-fees-and-subscriptions 

veryconfused20

Lola_balola said:

It might be helpful if you could tell us what the course was. 

I know doctors can claim relief on certain exam fees but not for the courses that prepare them for those exams. 

You might find this link helpful https://www.gov.uk/tax-relief-for-employees/professional-fees-and-subscriptions 

It was a DipHE in Paramedic Science; the course/exams are intertwined rather than provided separately.

As for professional fees, I do already claim these for my registration but the question regarding courses was asked separately to claiming for professional fees. 

Jeremy535897

The NHS of course pays no tax, so doesn't get a deduction, which is no doubt why the payment was deducted from net pay.

Have a look at https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim61018 and
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim32530

Read the case of CRC v Banerjee:
https://www.accaglobal.com/in/en/technical-activities/technical-resources-search/2011/june/hmrc-v-banerjee.html
https://www.thefriendlyaccountants.co.uk/tax-treatment-of-directors-and-employees-training-costs/