What is a training contract?
A training contract is understood to be a contract of employment where your employer agrees to provide you with some training as part of your employment, no matter what the contract is called.
Your employer may pay for you to attend certain training courses so that you can perform your job better. The full costs of this training, including any accompanying books, travel and so on will be tax free to you.
The tax-free nature of these payments includes the costs borne by your employer as regards work-related training within the whole range of practical or theoretical skills and competencies you are reasonably likely to need in your present or future jobs with your employer. It does not matter whether your employer bears the costs directly or instead you pay the costs and your employer then reimburses you.
The exemption extends to:
- training activities such as first aid and health and safety in the workplace
- employee development schemes
- activities intended to develop skills you need in leadership
- any training which is provided by a third party rather than your employer.
All the ways in which training can be delivered are covered including full-time and part-time training, internal training courses run by your employer, courses which are run externally or by a third party, and courses which comprise any mixture of these.
The tax exemption also covers:
- travel and subsistence expenses, to the same extent as if you were undertaking employment duties while training
- other incidental costs, such as additional childcare expenses directly related to your undertaking the training in question
- costs which relate to examinations and registration of qualifications
- costs of multi-media and distance learning aids, practical course materials and books.
Training, or training-related travel and subsistence, which is provided as entertainment, recreation, reward or an inducement, remains taxable.
Any asset provided to you or for your use is also taxable unless the asset is provided or used purely for training, or for training coupled only with use in the performance of your employment.
Assets provided to you (links to our LITRG website) by your employer for your private use remain taxable in the normal way.
My employer has paid for me to get specific training. Am I going to be taxed on the cost of this?
Assuming this is training related to your work, there will be no tax liability arising. This exemption from tax will almost certainly include training in management and basic computing skills. If the training is not work related, though, you will be taxed on that cost. So, if, for example, your employer paid you to obtain cookery lessons, but you normally work as a mechanic, you should expect to pay some tax.
You may also find it useful to read our section on employment expenses on our LITRG website.