School fees for an employee’s child

Our team of experts tell you what HMRC need to know if you pay school fees for your employees

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

Do you need to report school fees to HMRC?

If you pick up the costs of school fees for your employees’ children, these do need to be reported to HMRC and there will be additional tax and National Insurance to deduct and pay as a result. How these need to be reported and paid depends on how the fees are paid.

If your employee initially pays the fees and then you reimburse them, HMRC consider these to be actual earnings so the cost of the fees needs to be added to the employee’s other earnings. You will then deduct and pay PAYE tax and National Insurance through your payroll just as you do for their other earnings.

If the contract for the school fees is between your employee and the school but you pay the fees directly to the school, rather than through the employee, you need to report this cost to HMRC on your P11D form. You then deduct and pay Class 1 National Insurance through your payroll but there will be no additional PAYE tax to be paid.

If the contract is directly between you and the school and you pay the fees directly to the school, you need to report the cost of the fees to HMRC on your P11D form. You will also need to pay Class 1A National Insurance on the cost of the fees.

If paying the school fees forms part of a salary sacrifice arrangement and the amount of salary given up is greater than the cost of the school fees, you need to report the salary amount instead. This only applied to salary sacrifice arrangements made after 6th April 2017.

How can DSR Tax Claims help?

We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful.  Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

This page was last updated on 07/11/2018.

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