Share this content
5

Reimbursement of employee university fees

Can we reimburse employee for university fees dated prior to employee start date?

Didn't find your answer?

Hi everyone, We want to offer a new employee who will probably start his employment with us in January 2019 that we pay for his last university year fees.

Do we have an issue with compliance if we pay via expenses an invoice with a date prior to the start date of the employment contract?

If he pays 2 years of fees and we reimburse 1 year of that, is there any tax implication for us or him? (benefit-in-kind)

Any advice would be very much appreciated, Martin

Replies (5)

Please login or register to join the discussion.

avatar
By Accountant A
02nd Nov 2018 10:00

Martin Tarrant wrote:

If he pays 2 years of fees and we reimburse 1 year of that, is there any tax implication for us or him? (benefit-in-kind)

Hi Martin.

What is your thinking on this?

What has your accountant said on the subject?

Thanks (0)
avatar
By frankfx
02nd Nov 2018 12:39

You really must engage with your accountant.
Your ''take' on this subject is very distorted and this thinking may well be percolating through your business, and may ultimately be detrimental .

Thanks (0)
Replying to frankfx:
Portia profile image
By Portia Nina Levin
02nd Nov 2018 13:32

frankfx wrote:

Your ''take' on this subject is very distorted and this thinking may well be percolating through your business, and may ultimately be detrimental .

Why do you say that? What the OP is suggesting might be very tax efficient, if the circumstances are right. And, indeed, that the circumstances are not completely wrong.

Thanks (0)
Replying to Portia Nina Levin:
avatar
By Tax Dragon
02nd Nov 2018 14:10

I think on this we will just have to agree to agree.

Thanks (0)
avatar
By David Heaton
03rd Nov 2018 13:11

Look at https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim01235 and read the Silva v Charnock decision (http://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKSPC/2002/SPC003...(silva)+AND+(v)+AND+(charnock).

The invoice date is relevant, but there's no reason why you can't pay it: it's just that the tax consequences will differ if he paid the fees before he was employed by you.

It's impossible to say whether reimbursement will be tax-free under the work-related training rules because you don't give enough facts. However, if the fees were incurred before there was any prospect of your employing the person in question, your signing-on bonus will probably be taxable and NICable, so you may have to gross it up if you want it to cover the whole amount. If you don't get WRT exemption, it's not a BIK - you're giving him/her cash to meet personal liabilities - so you'd have to payroll it.

Thanks (0)
Share this content

Related posts