Training- Writing It Off Against Tax

[IDENTING]

As far as i know, once you've finished paying for your training, and finished training, obviously, why on EARTH cant you claim that cost against earnings from a subsequent flying job? Or can you?
I think Gordon Brown says no unless you have a job offer before you start flight training. The majority of us are not in this position so how does the inland revenue think we got the jobs that their quite happy to deduct tax from?
I reckon my debt for training in loan repayments is around 6,000 pounds per year over 5-7 yrs. Why cant i claim these yearly repayments against my gross earnings and be taxed on the remainder??? Answer me that Brown!
I would very much love an accountant to prove me wrong on this.
P.s I only found out this year that as uniformed pilots we can claim upto £950 in expenses per yr against tax.

Oh yeah, what about VAT, does anyone know if we can claim training VAT back?

Cheers.:ugh:

[v6g]

In Britain you cannot deduct flying training expenses from your tax or claim VAT (in Canada you can claim both). It's unfair but the concept of fairness has no relation to taxation policy - it's all about ease-of-collection.

[Sagey]

This has been one of those things that has annoyed me for years!!!. I even wrote to the Opposition Minister for Transport at the beginning of the year as a press release that the Conservatives put out gave me an opportunity to do so!.

The reply, whilst reading sympathetic, ultimately is a go away. It isn't really going to be an election winner after all!!. If you look at the VAT exempt vocational courses it is incredibly frustrating that flight training is not included.

Flight training is also a bit of a double whammy as fuel is taxed as well. With aviation coming under political scrutiny due to its perceived detrimental impact on the environment, politicians also need to educate and explain the financial benefits of a healthy aviation industry for the UK. The UK, and London, in particularly is a global market place. Foreign businesses are flocking to the UK due to its sensible regulatory scheme and financial services infrastructure.

This was the exchange. I have edited it a little bit to remove personal details:

Reply

Dear RT Hon Julian Brazier MP,
I read with interest the Conservative Party press release - ( http://www.conservatives.com/tile.do?def=news.story.page&obj_id=134274) "Post 9/11 – and we don't know the nationality of the pilots we're training".
Whilst the British government may not be aware of the nationalities of trainee pilots, I would very much expect that individual flight training organisations such as Oxford Aviation, European Flight Training Jerez, Cabair, Stapleford and the smaller operators have detailed records on the nationalities of all their trainees. I can certainly assure you that I had to obtain security clearance before commencing my course and I would suspect that this is the case for all pilot trainees.
Furthermore, with the advancement of technology and programs such as Microsoft Flight Simulator, many would argue that the only way to tackle a terrorist threat to aviation is through appropriate intelligence and security measures at UK airports.
With a predicted shortage of airline pilots in Europe in the near future, the Conservative Party press release has also given me somewhat of an excuse to raise another important issue, that directly relates to the intended nature of your question and that is "the health of the British commercial pilots sector".
Post 9/11, major airlines removed sponsorship opportunities, most notably British Airways. The days of full sponsorship for trainees are now over and whilst airlines do still sponsor on a lesser scale, the financial onus now lies with the trainee and not the airline.
The barriers to entry of becoming an airline pilot are considerable, with courses costing over £60,000.
The British government and the previous Conservative government do not appear to support trainee pilots and do not see it as a vocational course. Crippling VAT charges remain on many aspects of flight training that only increases the barriers to entry. A large number of other vocational courses are exempt from such VAT charges. The government and opposition for that matter, need to understand that there is a difference between pleasure flyers (PPL holders and PPL trainees) and those that are training for a career in the airlines and put measures in place so that young people who aspire to become pilots have the greatest opportunity to do so.
Reply:
I understand your concerns about the crippling costs of becoming a commercial pilot and am very sympathetic. I recently met with Martin Robinson and Pat Malone from the AOPA and General Aviation Magazine. The serious issue you outlined were echoed by them. As a result of the discussions with them, I tabled a number of questions to ascertain the health of the sector. I am continuing to work with Martin and Pat and now that Parliament has returned, will be looking to raise the political profile of these problems and hold the Government to account. I enclose a copy of the article by Pat, which appeared in General Aviation, based on our meeting.

[Whirlygig]

In Britain you cannot deduct flying training expenses from your tax or claim VAT

Who told you that? You can reclaim VAT BUT only if you are VAT registered as a self-employed pilot. This is quite feasible for most helicopter pilots who are freelance but not if you become an employee of an airline.

But it is possible. Deducting the expenses against tax is a different matter. I have heard of people doing it but, again, as self-employed, not employees.

There's no need to blame Gordon Brown. Those of us who are old enough should remember that it was that well-known airline pilot Norman Tebbitt who removed the tax status on professional pilot training!

[EpsilonVaz]

My 0-fATPL training in Greece has the VAT (19%) deducted.

yay me :cool:

[helicopter-redeye]

No VAT on professional training in Denmark - civilised country.

... There's no need to blame Gordon Brown ...

Why not?

[Whirlygig]

Oh all right REDI, you can! But he didn't remove it!

[IDENTING]

Yes, if its true, it sounds like this "Norman Tebbitt" has a lot to answer for! I'm going to look into his story and find out what his groove is. Don't tell me, he's probably dead isn't he? probably from the era of full sponsorship where you didn't have to pay for your PPL let alone your MEIR or Type Rating!... All conjecture of course!
Sagey, thats a great letter, thanks for doing that on behalf of us all! Not too bad a reply from JB MP either.
I met a helicopter guy during my atpls who had set himself up as VAT registered company where he had to train himself for the company. He could then lease himself out as a free lance pilot.
When I was an instructor I toyed with the idea of going self employed but the schools didn't seem to like it because of insurance issues.
So how does the 'uniformed commercial pilot' claim this £950 back on his tax return if he is not self employed? I don't know any self employed uniformed commercial pilots so how do they have a tax return? (I am referring to the flat rate expenses allowance (FRE)- find it at www.hmrc.gov.uk)

[Whirlygig]

So how does the 'uniformed commercial pilot' claim this £950 back on his tax return if he is not self employed
It is precisely because he is not self-employed and an employee that he can claim this allowance. Normally employees cannot claim much against their job-related expenses; the self-employed can.

It is a flat rate expenses allowance for commercial employed pilots; the self-employed claim tax relief on their expenses through their accounts.

http://www.hmrc.gov.uk/manuals/eimanual/EIM50050.htm

Most people who earn in the 40% tax bracket will have a tax return whether employed or not.

[StevenN]

If you do not prepare a Tax Return the £950 relief will be given through your PAYE Tax Coding.

You can get this in your coding either by writing to your Tax Office or by giving them a phone call (You can ask your employer for details of where your tax office is).

[IDENTING]

Nice one Steve, Don't suppose you know if one could back date this FRE? As in last year I didnt claim it because I didn't know about it?

[Quick Start]

The proffessional pilots fixed expenses can vary enormously.
Airlines and their unions negotiate a rate. An individual can just have a guess and see what the IR say.
I know First Choice pilots were claiming £2500.
I personally pick out a reasonable number, less than £2500, and so far IR have accepted it. Like a lot of things in life it's horse trading. One rule of thumb when dealing with the IR is don't tear the arse out of it, be sensible.

[StevenN]

Hi IDENTING

Yes you can make an amendment and claim a refund if you did not claim a FRE last year.

If you decide to claim expenses rather than the FRE I would ensure you keep all your receipts just in case the Revenue do decide to look into your tax affairs.

If you decide to claim expenses rather than the FRE then Quick Start's advice is spot on. If your expenses are too high then the Revenue might start to look into your tax affairs.

From my experience in working in tax (I was a tax adviser and not working for the Revenue!) unless you are unlucky and they do a random enquiry into your Tax Return it seems the Revenue only open enquiries into personal tax returns where there is a considerable amount of tax at stake. So if you dont over do it you should be fine claiming expenses.

[StevenN]

Just one thing whilst I am writing does anyone know if you can claim a deduction for your Class 1 Medical - this expense was not included in the FRE and I can not see whether it is an allowable deduction for tax purposes on the Revenue website.

[Whirlygig]

The Revenue have always used the general rule that if the expense is wholly, exclusively and necessarily for your employment (assuming you are an employee rather than self-employed), then yes, you can claim it as a deduction. In the case of medical fees, I don't see why not! You don't need a Class 1 medical for anything other than commercial flying although, if you do recreational flying, they might argue that the exclusively rule does not apply.

I claim my own professional membership subscriptions on that basis and, in addition, GAPAN membership is tax deductible.

[StevenN]

Cheers Whirlygig

[cavortingcheetah]

:hmm:
That was a neat and succinct paragraph Whirlygig, many thanks in clearing something up which has been a puzzlement for quite a while now.
Not a few years ago, this pilot worked exclusively in a self employed capacity for one particular little UK airline. The revenue held that expenses of no sort could be claimed even though the work was full time.
This was in the hard days when if one wanted to fly or to work in aviation, one had to roll with the punches and tolerate a certain degree of abuse from a company.
The airline in question eventually found itself in a certain degree of trouble with the revenue for having people working full time for it whilst not employing any of them. Enough people must have enquired about deducting expenses for the revenue office in Yarmouth (was it now?) to smell a rat among the eagles.:E

[Whirlygig]

This was in the hard days when if one wanted to fly or to work in aviation, one had to roll with the punches and tolerate a certain degree of abuse from a company.

...as opposed to ...... :confused:

The trouble is, the days have gone when one had a sensible Inspector of Taxes looking after one's tax affairs; now we just just have an under-paid spotty oik who doesn't know hay from a bulls foot who casts his judgment on his interpretation of the Income and Taxes Act/Finance Acts.

Years ago, I was told that the initial joining fee for my Institute was NOT tax deductible; only the annual subscription. However, I put the initial fee on my tax return and got it as an allowance. So, you never know ..... but that WAS in the days of reasonableness when I also managed to convince a VAT Inspector to allow VAT on alcohol on the basis that "doesn't everyone have a glass of wine with their evening meal?"

So, moral of the story - try and reclaim it; what's the worse that can happen? They disallow it. If they're feeling REALLY nasty, you might have to pay interest but only if you take it to the wire on your tax return submission dates.