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School Fees Tax Avoidance Schemes

School Fees Tax Avoidance Schemes

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In the questions to the Chancellor yesterday following the PBR, Ms Dari Taylor (referring to the new higher rate of tax) said "Will the Chancellor reassure the House that that tax will be collected and that we will not find that people who ought to pay that tax will avoid it by having part of their salaries paid in school fees, thus denying the public purse once again?" Darling did not deny that there were schemes to avoid paying school fees from net-of-tax pay, and did not tell MsTaylor that any payments would be assessable to tax as a benefit-in-kind.

Am I being stupid? Are there any schemes out there to avoid school fees being paid from taxed income or to be assessed as a b-i-k? Or, are MPs so out of date and/or uninformed that they think there are ways to save tax by getting one's employer to pay school fees?

If there are ways of avoiding tax with reference to school fees, I want to know (and so, I assume, will other accounting web users).

Ian Dalzell

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By AnonymousUser
26th Nov 2008 10:26

I'd really love to know too
I suspect she is poorly informed though. I can remember going on a course 12 years ago when a very eminent NI expert told us NOT to suggest to clients that their company pay the school fees to avoid NI (this was before class 1A) because there was a very strong legal case to the effect that, whatever arrangements the parents made, the parents had to be the ones contracting for the education (obliged to have children educated by law etc). So it would be a case of the payer meeting the parents' pecuniary liability. Certainly my own experience since of signing a contract with a private school was that the school makes it quite clear the contract is with the parent irrespective of who pays the fees & there are a lot of obvious and sound reasons for both parties why this should be so even putting aside the legal reasoning above.

Given the above, I cannot see how anyone can avoid tax or NI by having part of their salary paid in school fees.

Can someone prove otherwise?

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