Reclaiming Exam fees

[jswd32]

Hi,

I am a fully qualified financial advisor with a large uk bank. As part of the retail distribution review every qualified financial adviser in the uk has to now attain qualifications to diploma level by january 2013. If you do not pass these examinations by this date you are no longer able to advise and subsequently out of a job.

My question is that as these qualifications are essential to continue the same role within financial advising for no greater increase in earnings, are they a tax deductible expense? I will have numerous exams to pay for as well as study books etc..

Regards

Jonathon

[mullet]

In simple terms:

1. If your employer pays the exam fees, then they do not give rise to a taxable benefit as the qualification is linked to your job. This relief is given by Section 250 ITEPA 2003. In summary: "The exemption in Section 250 ITEPA 2003 removes any possible tax charge where an employer, or a third party, incurs expenditure on work-related training for employees. It does not matter whether the employer directly incurs the expenditure or reimburses the employee's expenditure. The exemption covers sums that would otherwise be taxable as earnings, as benefits, or under the vouchers rules. The exemption from tax applies equally to office holders."

2. But if you pay the fees yourself, you would not get a deduction. This is because the fees would not be incurred "in the performance of the duties of the employment", but rather to put you in a position to do such duties. EIM32525: "No deduction should normally be permitted under Section 336 ITEPA 2003 for expenses incurred by an employee for external education. This is so even where the subject of the education is closely relevant to the nature of the employment. The expenses are not deductible because they are not incurred in the performance of the duties of the employment, see EIM31650."