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Paying my University Fees from my own company

Dear all,

I am the director and sole shareholder of a limited company. I operate this way because of the idiosyncrasy of my clients. I design software. At the moment, my only income are dividends from the company and, possibly, for this year I will commence as an employee with a very low salary and the rest of my income will be dividend.

I am reading for a PhD in Mathematics which is directly related to the activity of my company. I am enrolled as a part time student. The algorithms and knowledge developed are directly used by the company.

I am trying to find the best way to reflect the connection between company/studies/director and my doubts are:

If the company pays for the fees:

  • For the company would be an expense and not taxable in corporate taxes but;
  1. Is it considered training and development of the director on the benefit of the company? As per and not be considered benefit in kind...
  2. could it be considered a benefit in kind for me as director? Although the research directly improves the position of the company in the market and makes it more competitive with better technology and offer.
  3. If so; would I have to pay tax and NIC over the amount of the fees? and, I understand this tax would be differently treated from the dividends obtained.
  • If I pay the fees.
  1. The fees will not deducted the taxable amount for the company
  2. I, as director and getting the fees as dividend, pay the corresponding taxes on the fees but no NIC

I believe the best way is the company to pay the fees and that there is reasonable doubt as per transferring the taxation into the director in the founds of benefit in kind, being finally a company expense and not flowing any further but I am not expert.

I have been trying to find information regarding this but not very successfully. I don't think is a scholarship case and the information at does not apply. (I cannot find the EIM06203 anywhere anyway)

Please, could someone advise?

Many thanks in advance.


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I think you would have a difficult job presuading the Inspecotor that this is "job reallted training" which is defined as:-

For the purpose of the exemption in Section 250 ITEPA 2003 (see EIM01210), "work- related training" is defined as any training course or other activity which is designed to impart, instil, improve or reinforce any knowledge, skills, or personal qualities which:

are, or are likely to prove, useful to the employee when performing his/her duties orwill qualify or better qualify the employee to undertake the employment, or to participate in charitable or voluntary activities arising through the employment.

The training must relate to the employee’s current employment or to a "related employment" (see EIM01230).




The reason I say this is that you are doing your job at the moment - how does this course improve the way that you do your duties.

You seem to be convinced that the Schollership rules do not apply.


If the fees are billed to the Company, and in the company name, then, if it was a benefit in kind, then you would be taxed on it via P11d etc.


This means that you pay Income Tax at 20 / 40%, and that the Comany would pay Class 1A NIC at then end of the year.


My advice would be pay the fees outsisde of the comany, and finance this from dividends.





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Why do you think that this isn't training that will "qualify or better qualify" the employee to perform the duties of the employment.  I think the OP has explained how it will.

I think the problem with the arrangement is perhaps identified in THIS THREAD, brought to my attention by Ding Dong recently.

The scholarship provisions can't apply because it's not full-time.

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31st Jan 2013 16:43

thank you

George; thank you very much for your views.

George, I think similarly and the research degree directly affects the company as per improving business opportunities, capacity and future markets expansion.

You are right that a full time course is a condition for the scholarship route. The thread that you link is very interesting -I didn't find it when looking for an answer- and I think is very relevant to my case.

I have talked to the university and they are happy to invoice to the company, which is a plus in this case.

I think the case is not crystalline but there is reasonable believe that it qualifies for training and as such will do my best to convince the taxman if needed.

So following this route (let's grant it right), my question is:

-the cost (mostly fees) are classed as expenses for the company and are not taxable as corporate; right?

-I am not taxed either over this sum; am i?


again thank you very much!


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I think you can argue

... that it fits within the work-related training exemption.

As identified in the thread I referred to, usually any benefit can be claimed as a trading expense because, being remunerative, it's incurred wholly and exclusively (W+E) for the company's business.

With this though, it's possible for HMRC to argue that it's partly for the benefit of you to try and disallow it.  You obviously need to argue that it isn't from the trade benefit angle

If you argue that it's W+E as remuneration, you then fail one of the excluded purposes tests of the work-related legislation.

If they successfully argue that it's not W+E, then it's not allowable and potentially taxable as a dividend.

Which is where you would be if you extracted funds from the company to pay for it.

There is a risk though that HMRC would just argue that it doesn't satisfy the work-related training exemption, and so is taxable and NICable, and you'd then have to take the matter to tribunal.

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20th Oct 2015 15:14

Did you do this?

What was the result?

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