Tax Planning and school Fees

Tax Planning and school Fees

Didn't find your answer?

My client is looking for any tax planning opportunities on school fees of around £60,000 long term

The only way I have come across is that if he wishes his company to pay his school fees and contract for this then we may be able to get a deduction against corporation tax instead of receiving a salary.or a dividend. Both directors husband and wife are 40% taxpayers.

Any thoughts would be appreciated. Thanks

Replies (1)

Please login or register to join the discussion.

Locutus of Borg
By Locutus
28th Dec 2011 19:39

This doesn't sound tax efficient to me

Even if the school invoices the company for the school fees, in reality this cost is nothing to do with the running of the company, since another similar company whose directors do not happen to have children would not incur this cost.

My understanding is that payment of the school fees by the company would effectively be treated as part of the director's remuneration package.  As such payment of school fees would need to be grossed up for PAYE and employees national insurance and employer's national insurance accounted for on the gross.

You will note that question 5 of the P35 employer's annual return specifically asks: -

"Have you paid any of an employee’s pay to someone other than the employee, for example,
to a school?  If 'Yes', have you included this pay on their form P14?"

Small salary, balance as dividends and directors personal expenses (such as school fees) paid personally is usually the most tax efficient route.

 

Thanks (0)