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Sam
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Category: Tax
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In the last year I went to do a part-time masters course alongside

Resolved Question:

In the last year I went to do a part-time masters course alongside work and my employer paid the majority of the expense. The way we handled the payment was that I paid the course in full and got the reimbursement form my company. This reimbursement ended up on may pay check for the month it occured which ultimately increased my total pay for the tax year and I therefore have a significant underpayment in tax. Is this not deductible somehow?
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.

Hi

 

Thanks for your question, my name is XXXXX XXXXX I am one of the UK tax experts here on Just Answer, with 26 years previous experience working with HMRC,

 

Can you advise whether this masters degree tied in with any aspect of the job your were employed to do, or was it to enhance your position for either promotion of other employment.

On what basis was the employer willing to pay for most of the expense? How would they benefit from this cost to the company.

 

Thanks

 

Sam

Customer: replied 3 years ago.


Hi Sam,


 


I work for a real estate fund and the masters is a masters in finance. The coursework directly applies to my current job and on that basis my employer was willing to pay for it.


 


Hope this is addresses your question.


 


Thanks


 


Dominic

Expert:  Sam replied 3 years ago.

Hi Dominic

 

Thanks for your question

 

Then you can claim this additional money paid for the course,as an expense incurred through your employment - as if its directly linked with your current employment then it benefits the employer.

 

Do you complete self assessment tax returns or have you been assessed for the tax due under a P800 calculation ?

Let me know and I can advise how to rectify this.

 

Thanks


Sam

Customer: replied 3 years ago.


Thanks Sam,


 


I am just completing the self assessment and wanted to make sure I deduct this appropriately if possible.


 


Will I have to submit a receipt to HMRC?


 


Thanks


 


Dominic

Expert:  Sam replied 3 years ago.

Hi Dominic

 

Thanks for your response

 

Then based on what you advise this is an allowable deduction and there is no need to submit a receipt, unless HMRC pick your return up for review, in which case, they may ask for further information (as I have done) and within that request for further information may ask for clarification from your employer for that same information.

 

If you have a receipt for the costs, then its worth hanging onto, just in case this is asked for, but there is every chance that HMRC will just accept the figures.

 

So you just complete within the employment expenses section, the costs that are attributable to what the employer paid to you as reimbursement for the course fees.

 

Thanks

 

Sam

 

 

Customer: replied 3 years ago.


Thanks,


 


Sorry - I thought the deductibility is only for the amount that I paid over and above the cost that my employer covered. Or is it both?


 


That should be it.


 


Thanks


 


Dominic

Expert:  Sam replied 3 years ago.

Hi Dominic

 

Thanks for your response

 

Whilst you can claim both - the question HMRC would ask is why the employer did not make good the whole course cost, so they clearly felt that the course would also benefit you with perhaps future ventures or employment - might this be the case? If so I would just claim the cost the employer covered (so in essence - equal to the amount that you are unpaid by due to this being p[aid through your salary) because if HMRC ask after it, you are seen to just have claimed a reasonable amount -

as usually if the employer wanted this entirely for work related purposes, they would have paid for the whole cost - and this is not the case.

 

Let me have your thoughts/response as to why the employer did not pay the whole amount.


Thanks


Sam

 

 

 

 

Customer: replied 3 years ago.

Sam,


 


Thanks.


 


The course is actually £34,000 (tuition only). My employer asked me to pay 15% myself (through deductions of my paycheck over a period of two years) simply to show that I am really motivated and that I don't want to take advantage of my employer. I am committing to stay with my employer for a total of 4 years as part of this deal.


 


So all in all - of course this would make me more marketable as an employee. However I think the agreement with my employer shows that this is also a way for them to make sure they take advantage of my additinal knowledge and in fact retain me for a long period.


 


Thanks


 


Dominic

Expert:  Sam replied 3 years ago.

Hi Dominic

 

Thanks for your full response.

 

This sounds like a reasonable position for the employer to take - and on that basis I would agree that the whole cost of the course could be claimed.

I have added a link here from the employment income manual that details when those costs should be apportioned

http://www.hmrc.gov.uk/manuals/eimanual/EIM01210.htm

 

This clearly was not a reward for you, and based on what you advise it was directly linked to your employment at that time (and continues to do so) and has tied you with that employer for 4 years, so they benefit from the training you have undertaken, which further supports the position.

And the purpose of the 15% you paid (and the amount you were out of pocket) was to show your seriousness to the course and the employer, rather than because there was an element of the course, that would not benefit the employer, or was not employment related.

 

And if you are happy (as is your employer) to accept this was all related to your job at that time, then HMRC should not have room to disallow the full claim.

 

Thanks

 

Sam

 

 

 

 

 

 

 

Sam and other Tax Specialists are ready to help you
Customer: replied 3 years ago.


Thanks so much. I think that covers it for me.

Expert:  Sam replied 3 years ago.

HI Dominic

 

You are very welcome and if you need any additional advise OR HMRC do challenge this, then do feel free to come back to Just Answer, and you can always ask for me Sam Tax, to be sure of getting me.

 

Thankyou for the rating and bonus, much appreciated !

Thanks


Sam

Customer: replied 3 years ago.

Thanks Sam. I will certainly do.


 

Expert:  Sam replied 3 years ago.

Thanks