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Retraining as part of redundancy payment

Are amounts paid relating to retraining taxable as part of a redundancy payout

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A client has received a lump sum amount following redundancy. Included in this amount is a figure of £8500 for retraining. Am I right in thinking this is tax-free? Are there any restrictions based on the amount received?

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04th Jun 2019 16:41

If money is paid to the former employee, it's taxable, whatever s/he uses it for.

EIM13745 states that outplacement paid directly by the employer is not a taxable benefit and it seems reasonable that retraining would be treated in the same way.

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By DJKL
04th Jun 2019 16:41

What is the overall total of the non contractual payments to the employee?

Willing to be proved wrong but find it really unlikely that extra payments (over the £30k) can be paid direct to employee for him/her to apply to retraining and these somehow escape tax.

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to DJKL
04th Jun 2019 16:44

Total amount is around £90k so yes these are amounts over the £30k.

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By DJKL
to divelegend
04th Jun 2019 16:53

So looks likes client needs to get employer to pay cost direct to the training provider.

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04th Jun 2019 17:12

Is it an allowance or a reimbursement.? Reimbursement falls within ITEPA 2003, s 311, but there are a number of conditions:

See https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim05005 onwards

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