Employer paying school fees

[MsAverage]

I just heard that if your employer pays your child's school fees, it is tax-free for you, you pay only 2% of NICs. Is that right? Is that the normal way to pay these fees?

I don't believe so, I think it's a taxable benefit in the normal way, but am bumping in the hope that someone more knowledgable comes along!

Is it possible you are thnking of Childcare vouchers?

School fees are taxable, see page 2 here

Ok, here it is.
www.hmrc.gov.uk/payerti/exb/a-z/s/school-fees.htm#2

"add the value of the benefit to the employee's earnings when deducting and paying Class 1 NICs (but not PAYE tax) through your payroll"

But then the tax code is adjusted and you still have to pay the tax.

Did I read somewhere there was some sort of loophole whereby a private school could deduct school fees from an employees salary before NI almost like a salary sacrifice - or am I wrong.

Would be nice if that was possible.

www.fismagazine.co.uk/financial/accounting/salary_sacrifices.html

Ooh! Is this up to date?

It's accurate but obviously only applies to the employees of the independent school that work at the same school where they want to send their children, not any employees. And obviously the school has to agree to offer their employee's child a place at a discounted rate.

Dh is an employee of the school that dd will be going to in September and we have been offered a substantial discount on fees.

In that case if the employer is willing to go down the salary sacrifice route and the figures stack up it may be worth doing.

Ive sent him a link and hes going to speak to someone tomorrow.

I haven't read the article but there are various issues with salary sacrifice (I do it with nursery fees - get all of those paid by employer tax free) - death in service / redundancy payment etc are based on the lower pay once the salary sacrifice has been deducted. Not a massive issue for your DH (unless he's planning paternity leave and presumably it would only be a couple of weeks in any event) but it had a big impact on my maternity pay. Just make sure you appreciate that its not without its risks.

No, he's not planning paternity leave lol. He's been tied!

thought it was worth mentioning