Boring work and reimbursement of fees question - sorry!

[tencent]

My workplace offered me a deal whereby they would reimburse the cost of a qualification I have paid for myself, if I agreed to stay for a certain period of time. It was more complex than that, but that's the gist. From the start I asked if I'd be taxed on the reimbursement, as it might make a difference to my decision. This scheme has been run for others and their costs have been paid directly, so no tax. I was told something could be sorted out, but today have been told they can only reimburse through my wages, which means paying tax. It is a sizeable amount and I feel that whilst I am held to the same terms as colleagues, I won't get the same 'reward' for want of a better word. It's particularly galling as I was advised by finance to pay for the latest part of the qual myself as it would be easier and that I'd be reimbursed, only once I'd done it to be told about the tax. This was during a verbal meeting so no email trail. Anyone have any advice?

We reimburse some expenses via payroll and not all are subject to tax - so don't panic just yet.

www.gov.uk/expenses-and-benefits-training-payments/whats-exempt

Thanks for that @Hahahahohoho , really kind of you to take the time to post. Unfortunately it says the following:

If you reimburse an employee who has arranged and paid for the training
The amount you reimburse them counts as earnings. You’ll need to:
add the amount to the employee’s other earnings
deduct and pay PAYE tax and Class 1 National Insurance through payroll

Had they confirmed this beforehand I might not have agreed, but they just brushed my queries off saying something could be sorted. The tax will be around £2000 so I'm quite a lot of money down compared to the other people.

Can you link to the page on HMRC's website please?

Look at the technical guidance on the HMRC website. If it is "work related" training then it is exempt and you won't pay tax on any reimbursement.

www.gov.uk/government/publications/non-taxable-payments-or-benefits-for-employees-hs207-self-assessment-helpsheet/hs207-non-taxable-payments-or-benefits-for-employees-2019#employer-funded-or-employer-reimbursed-training

Have a look here it says both employer funded and employer reimbursed training are exempt.

The part I quoted was on this page: www.gov.uk/expenses-and-benefits-training-payments/what-to-report-and-pay

It's a degree/professional qualification that I undertook independently and wasn't needed for my role at the time, but when I went on a placement they offered me a package, part of which was reimbursement of the costs I'd already paid. I think that comes under the part re an employee arranging and paying for training. I may well be missing something though, I'm the first to admit that I don't understand financial compliancy!

Whilst you might be worse off than others and getting the reimbursement increased so once taxed you are in the same position as others, it sounds like you did the qualifications for your benifit rather than works initially. Surely in that case, getting the majority of it back is still a benifit worth having?

That page doesn't distinguish between who employer pays and employee pays and gets reimbursed in terms of tax. The other page I linked to it didn't either

Employer pays - it goes on your P11D - you pay tax.
Employee pays and gets reimbursed through payroll - you pay tax.

So either everyone before you paid tax through P11d or no one did and you shouldn't either - or they screwed up before and have just realised.

Maybe you need to call HMRC for further clarification.

Not really @ChristmasCakeAndStilton , because I forwent redeployment/a large redundancy on the understanding that I would be fully reimbursed. I've also taken a pay drop in the new role that's linked to the whole thing. Unfortunately it's not the only goalposts that were moved and it's all a bir of a mess really.

The others had their fees paid directly to the awarding body @Hahahahohoho. I'm a bit of an anomaly, but I was sold it on the understanding that the benefit would be the same to me, so I would then also have to agree to working there for the same period of time after qualifying as the others. Had I been informed that it was different, that would have been ok and I would have had a range of options and could have made a decision on the facts. However, my decisions were based on things that have now changed.

The others had their fees paid directly to the awarding body @Hahahahohoho. I'm a bit of an anomaly, but I was sold it on the understanding that the benefit would be the same to me, so I would then also have to agree to working there for the same period of time after qualifying as the others.
The method of payment is irrelevant. If the training is subject to tax and NI payments then it must be paid - if your employer pays directly - they need to declare the benefit on your P11D and then you will pay that tax the following year - your tax code will be altered. Otherwise they reimburse you via payroll and you pay tax that way.

If a course you are on is not exempt from tax - you will pay tax regardless of who pays the provider.

I'm sorry @Hahahahohoho , I know you're doing a great job of explaining, but I'm clearly a bit thick when it comes to this! Let me see if I've got this right - if an organisation sponsors an employee to complete a professional qualification, even if it's not needed for their current role and even if they pay the university fees via a sponsorship payment, then the amount paid will be shown on the P11D. The sponsoree won't pay the tax until the following financial year, but it will be taken from PAYE as their tax code will be adjusted? Is that right? So if it was 3 years they would pay (on a £10,000 degree) an extra £666 tax a year for 3 years. Is is always, definitely counted as a taxable expense? If so I'm a fool and I have no right to make a fuss. Mortified! Honestly, every time I've asked about it they've agreed that I shouldn't pay tax and have never said anything about anyone else paying tax! I which case I can only conclude that they don't understand it either - then again, they weren't from finance.

I can't tell whether the course you went on is a taxable expense - HMRCs advice seems contradictory - so you need to check with them independently just give them a call - they are quite helpful - but you cannot avoid paying tax by getting your employer to pay for your course directly.

If your employer pays for a course that is not tax-exempt you will pay tax through P11D/which will impact your tax code or payroll which comes off directly, but you will pay tax and it's not your employer's fault if that is the case - it's the Government who have written the rules.

Firstly find out if the course is a tax-exempt benefit. Speak to HMRC before you do anything.

Thanks you @Hahahahohoho , that's great advice and I'll give them a call after Christmas.