Paying school fees through a company

Can my company pay my children's school fees as a legitimate tax deductible expense? I am the sole director of the company. I was thinking to employ them but they are only 11 years old, so employment laws would be a problem.

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Can my company pay my children's school fees as a legitimate tax deductible expense?
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Comments

Kent accountant's picture

No

Kent accountant |

But then your accountant should be able to tell you this.

Yes it can

John - Horler Tax |

 

But you will then have a personal tax and NI charge.  So will probably be worse off.

Kent accountant's picture

Read the OP

Kent accountant |

"...legitimate tax deductible expense..."

I did!

John - Horler Tax |

Just because the director suffers a tax charge doesn't stop the payment being a legitimate tax deductible expense in the company.

Your company could pay

MJ Green Accountancy |

Your company could pay childcare vouchers towards the costs but if you have other employees you have to make this service available to all of them. This can be done by way of a salary sacrifice, taking care not to breach minimum wage legislation.

 

The company can pay £55 per week as a childcare voucher tax free.

Luke's picture

Childcare vouchers

Luke |

Cannot be used to pay regular school fees.

No but there is often an

MJ Green Accountancy |

No but there is often an element of childcare included in school fees and if it meets the following criteria, then it should be ok.

If you use childcare provided by a school

If you use childcare provided by a school, it must be:

  • provided under the direction of the school's governing body or the person responsible for managing the school
  • on school premises, or other premises that may be inspected as part of a school inspection - either by Ofsted or an equivalent inspection body (for example the Independent Schools Inspectorate, Bridge Schools Inspectorate or the Schools Inspection Service)

An example of 'other premises' could be where a school uses a village hall for their out of school hours care.

If your child is between five and 15 years old (16 if they're disabled), the childcare must also be provided out of school hours.

@ kent accountant

Mouse007 |

Kent accountant wrote:

Read the OP

"...legitimate tax deductible expense..."

 

The answer is YES - John was correct

 

The legitimate tax deductible expenditure is the provision of a taxable benefit in kind on the director

Kent accountant's picture

Ok

Kent accountant |

Perhaps I've been too laissez faire in my answer - it is Saturday.

I don't think the OP is thinking of/aware of BIK's but purely in having an additional business cost to reduce profits and tax. 

It starts with school fees and then where does it stop - before you know it the business bank account is treated like a personal account.

Sounds like the man down the pub may have sown a seed.

My advice is always no and if pushed explain that it will result in:

1. Higher accountancy fees.

2. A taxable benefit.

3. The increased likelihood of an enquiry.

 

Many thanks for all the input

garry |

Many thanks for all the input on this. My salary/drawings from the company could be reduced to take account of this private education for my children( less personal tax). The company billed directly by the school (a legitimate expense for the company?). The companies NI goes on my P11D, so I save paying the Employee NI.
Some companies do offer school fees, but I do not know if this would be acceptable for a one man director company.

taxhound's picture

You can save the employer's NI too

taxhound |

By taking a dividend from the company and paying the fees privately.

@Kent Accountant

The Innkeeper |

You forgot point 4.....   Fees in respect of HMRC Investigation !!

Shameless

tomtrainer |

I have far more money than most people, and would like to avoid contributing to the UK's finances whilst also being too tight to pay an accountant to help me do this, so I am looking for free advice.

I do have an accountant, but

garry |

I do have an accountant, but he was unsure. This is obviously a question for a specialist as there is no consensus. The Royal Navy certainly pay school fees for some of their personnel, whether they pay their tax as well I do not know. I know of some off-shore workers who also have their school fees paid. Maybe it is tied in to being sent away by your company and then it all becomes an allowable expense.

I've been promoted

Mouse007 |

There I was thinking I was just an average GP type accountant, but now I know there are accountants out there who don't know the basic stuff and all of a sudden I'm a specialist

Yippy

 

 

 

 

 

Please see this previous post for an easy scheme

Justin Bryant |