Tax relief on training.
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Guys you should really speak to an accountant who would be able to advise you properly. Starting your own 'business' just to invoice the flying school you effectively are employed by can get quite complicated, search the HMRC website for IR35 and see what pops up.
Again remember the difference between VAT and the income tax that you have paid on the money that you are paying out for your training. It is not really the taxpayer funding your training in any sense of the word it is just deducting your training expenses from your income.
Speak to someone in the know who will be able to advise you properly!
Again remember the difference between VAT and the income tax that you have paid on the money that you are paying out for your training. It is not really the taxpayer funding your training in any sense of the word it is just deducting your training expenses from your income.
Speak to someone in the know who will be able to advise you properly!
Hovering AND talking
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There may be some confusion here between VAT and Income Tax.
One can, quite legitimately register for VAT whilst training and claim back the VAT. HM Revenue & Customs will expect to see a business plana dn part if this business plan will be that you intend to be self-employed after training. If not, then you may have to repay the VAT claimed back.
Therefore, in the original post, where it is talking about claiming back tax and expenses provided there is a job at the end of it, we cannot be talking about VAT. Therefore, if it is Income Tax then I'd be surprised since I do not believe that Flying Training is one of those qualifications for which tax relief is available. It was abolished I think, of all people, by Norman Tebbitt.
You MAY be able to do it again, if your intention is to be self-employed/freelance after qualification but I would imagine you would need a specialist accountant not just a b0g-standard one like me!!
Seriously, if anyone can post any links or information about this, I'd be grateful because at the moment I am very sceptical about this.
Cheers
Whirls
One can, quite legitimately register for VAT whilst training and claim back the VAT. HM Revenue & Customs will expect to see a business plana dn part if this business plan will be that you intend to be self-employed after training. If not, then you may have to repay the VAT claimed back.
Therefore, in the original post, where it is talking about claiming back tax and expenses provided there is a job at the end of it, we cannot be talking about VAT. Therefore, if it is Income Tax then I'd be surprised since I do not believe that Flying Training is one of those qualifications for which tax relief is available. It was abolished I think, of all people, by Norman Tebbitt.
You MAY be able to do it again, if your intention is to be self-employed/freelance after qualification but I would imagine you would need a specialist accountant not just a b0g-standard one like me!!
Seriously, if anyone can post any links or information about this, I'd be grateful because at the moment I am very sceptical about this.
Cheers
Whirls
Flies for fun
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VFE, Perhaps you would care to read and inwardly digest "downunder's" original post at the top of the page and then post further comment when you are having a better day. If you are unaware of the difference between HM Customs and Inland Revenue then I would suggest that you should enquire at the appropriate offices for clarification.
With regards your "crossed lines" reply, I and many others here will be very interested to see a copy of any letter from HM Customs indicating that VAT on the whole of ones training can be recovered.
With regards your "crossed lines" reply, I and many others here will be very interested to see a copy of any letter from HM Customs indicating that VAT on the whole of ones training can be recovered.
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It would appear to me that most of the information posted on this thread is either out of date, based on rumour or plain wrong. My own experience of running a business suggests that two different tax inspectors will give totally different answers to the same question, so any information you receive second- or third-hand is inevitably flawed and may land you in trouble.
If you are seriously considering setting up any kind of tax-avoidance scheme, take legal advice first. If you are using a third party to do this for you, get an affadavit in writing that what is being done in your name is fully within the law, including references to the tax legislation that allows it. If you're still not happy, send a copy of that affadavit to your tax inspector for his or her comment.
My suspicion is that any such tax-avoidance scheme is not legal for the purposes for which you appear to require it (funding initial training). After a good deal of discussion with the tax people, we at Virgin have had to accept that expenses incurred on our own initial company training (accommodation, travel, etc) are not tax-deductable, though expenses incurred once we are qualified are free of tax (though even this is disputed between two particular tax inspectors!). The full details would make a very long and boring story here, but this precis will suffice to illustrate that your schemes may be unlikely to succeed.
This is a minefield, and your advice must be rock solid - and will therefore be expensive. Do not base any decisions on what you read in an internet forum.
Scroggs
If you are seriously considering setting up any kind of tax-avoidance scheme, take legal advice first. If you are using a third party to do this for you, get an affadavit in writing that what is being done in your name is fully within the law, including references to the tax legislation that allows it. If you're still not happy, send a copy of that affadavit to your tax inspector for his or her comment.
My suspicion is that any such tax-avoidance scheme is not legal for the purposes for which you appear to require it (funding initial training). After a good deal of discussion with the tax people, we at Virgin have had to accept that expenses incurred on our own initial company training (accommodation, travel, etc) are not tax-deductable, though expenses incurred once we are qualified are free of tax (though even this is disputed between two particular tax inspectors!). The full details would make a very long and boring story here, but this precis will suffice to illustrate that your schemes may be unlikely to succeed.
This is a minefield, and your advice must be rock solid - and will therefore be expensive. Do not base any decisions on what you read in an internet forum.
Scroggs
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Reply from HM Revenue & Customs
The following is a reply from a revenue executive at Cardiff dated 20/05/06 quote:
" Tax relief for individuals on training costs are not normally allowable, the legislation governing this is at section 336 ITEPA 2003. The effect of this legislation is at EIM 32520 onwards.
What you have been told is with regard to training costs bourne by an employer. Details of this can be found in EIM 021210 onwards, EIM 01235 is particularly relevant.
I cannot give you any opinion on the eventual outcome of your finding a sponsor and the tax treatment of any reimbursement without knowing the specific details of that arrrangement."
www.hmrc.gov.uk
" Tax relief for individuals on training costs are not normally allowable, the legislation governing this is at section 336 ITEPA 2003. The effect of this legislation is at EIM 32520 onwards.
What you have been told is with regard to training costs bourne by an employer. Details of this can be found in EIM 021210 onwards, EIM 01235 is particularly relevant.
I cannot give you any opinion on the eventual outcome of your finding a sponsor and the tax treatment of any reimbursement without knowing the specific details of that arrrangement."
www.hmrc.gov.uk
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had a quick search through the website on Eployment Income and it is possible if it is pre-agreed but not certain. Have a look at :
http://www.hmrc.gov.uk/manuals/eimanual/EIM01235.htm
it starts going into case law and as I have no sponsor and want to be a pilot not a barrister I'm going to leave it at that. Perhaps there is someone out there on the other forums who has successfully been through this.
Good luck the lucky few
http://www.hmrc.gov.uk/manuals/eimanual/EIM01235.htm
it starts going into case law and as I have no sponsor and want to be a pilot not a barrister I'm going to leave it at that. Perhaps there is someone out there on the other forums who has successfully been through this.
Good luck the lucky few
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Are ATPL costs tax deductable?
Hi there,
Can any of the costs involved with gaining a frozen ATPL / pilots job be reclaimed through the UK tax system as a legitimate expense / cost.
Regards,
straightlevel.
p.s. is this in the correct forum?
Can any of the costs involved with gaining a frozen ATPL / pilots job be reclaimed through the UK tax system as a legitimate expense / cost.
Regards,
straightlevel.
p.s. is this in the correct forum?
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I would hazard a guess as no (unfortunately) otherwise it would be widely advertised. I seem to remember it might have been a few years back but I believe Mr Brown has long sinced closed any loopholes.
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I asked a similar 'what if' question (not on Pprune I might add) a year back.
It seems that if your training is geared towards you working for yourself (e.g. freelance instructor, etc) then in theory you could set yourself up as a company and claim the vat back.
I'm becoming a little vague from here...
I think you may have to wait until you are actually functioning in some sort of self employed, revenue generating capacity before you can claim it back but there is some leeway in retrospective claims if the period is not too long.
Or if a company is paying for you to become their pilot, then i suppose they can claim VAT back to if they paid for the training.
I should point out this comes from a passing conversation i had with a financial type friend, but hope it helps
It seems that if your training is geared towards you working for yourself (e.g. freelance instructor, etc) then in theory you could set yourself up as a company and claim the vat back.
I'm becoming a little vague from here...
I think you may have to wait until you are actually functioning in some sort of self employed, revenue generating capacity before you can claim it back but there is some leeway in retrospective claims if the period is not too long.
Or if a company is paying for you to become their pilot, then i suppose they can claim VAT back to if they paid for the training.
I should point out this comes from a passing conversation i had with a financial type friend, but hope it helps
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Absolutely not unfortunately.
Gordon specifically excluded aviation training from being tax deductible training, and it includes all structures to avoid it such as companies.
Anyone who has achieved tax refunds would be in a very sticky situation if their position were discovered on a tax audit.
Gordon specifically excluded aviation training from being tax deductible training, and it includes all structures to avoid it such as companies.
Anyone who has achieved tax refunds would be in a very sticky situation if their position were discovered on a tax audit.
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Interesting... XLA, TCX and TFly (in conjunction with OATS and/or FTE) give their "sponsored" students £1,000 on top of their monthly salaries (to pay off the loan) which they say is tax free. How does that work then?
Hovering AND talking
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Please don't be confused with income tax and VAT.
As markymojo says, the VAT can be reclaimable if you intend to set up as a freelance/self-employed pilot after qualification. If you don't you could be liable to pay the VAT back.
You can't reclaim income tax or tax losses for training any more.
Superpilot, to answer your question, where are these companies based? I've not heard of them or the scheme. If they are UK companies, I can't see how it works either!
Cheers
Whirls
As markymojo says, the VAT can be reclaimable if you intend to set up as a freelance/self-employed pilot after qualification. If you don't you could be liable to pay the VAT back.
You can't reclaim income tax or tax losses for training any more.
Superpilot, to answer your question, where are these companies based? I've not heard of them or the scheme. If they are UK companies, I can't see how it works either!
Cheers
Whirls
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I have looked into the income tax side of this from a training company / airline point of view and a summary of my conclusions is as follows. Note that I have not looked at the VAT reclaim / self employed instructor issue but believe Whirlygig is right - although I doubt you would be able to claim the VAT back in the first place - at least until you are revenue earning and thus charging VAT on.
The way I believe a tax efficient structure would work is -
1 Student is offered a provisional position with airline
2 Student pays a bond to the airline to cover the cost of the training (no VAT)
3 Student completes training and is given position within airline.
4 Airline pays the student a (normally) reduced salary plus a monthly bond repayment
5 The bond repayment is not income (repayment of loan) and therefore not taxable as income.
Result
1 Student has not paid VAT, airline has but can reclaim in the normal way.
2 Student has had tax and NI relief on course costs.
Note that rules change and any scheme would need HMRC clearance. This is just to show you the sort of hoops you need to go through in order to have a chance of setting such a scheme up. As an individual (no airline contract) you cannot offset the costs against tax.
Looking through all this, what has "really" happened - who has paid for the course, the student or the airline? This depends on the amount of "salary deduction" imposed by the airline. If none then the airline has effectively paid for it with the student just lending (the bond) it the money. The amount the student has its salary reduced is the extent to which they are funding it.
Most schemes I have heard of involve a significantly reduced salary for a finite period. However, take home pay may be the same or higher than a "normal" salary as there is no tax on the bond repayment
The way I believe a tax efficient structure would work is -
1 Student is offered a provisional position with airline
2 Student pays a bond to the airline to cover the cost of the training (no VAT)
3 Student completes training and is given position within airline.
4 Airline pays the student a (normally) reduced salary plus a monthly bond repayment
5 The bond repayment is not income (repayment of loan) and therefore not taxable as income.
Result
1 Student has not paid VAT, airline has but can reclaim in the normal way.
2 Student has had tax and NI relief on course costs.
Note that rules change and any scheme would need HMRC clearance. This is just to show you the sort of hoops you need to go through in order to have a chance of setting such a scheme up. As an individual (no airline contract) you cannot offset the costs against tax.
Looking through all this, what has "really" happened - who has paid for the course, the student or the airline? This depends on the amount of "salary deduction" imposed by the airline. If none then the airline has effectively paid for it with the student just lending (the bond) it the money. The amount the student has its salary reduced is the extent to which they are funding it.
Most schemes I have heard of involve a significantly reduced salary for a finite period. However, take home pay may be the same or higher than a "normal" salary as there is no tax on the bond repayment
Hovering AND talking
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In a nutshell, it no longer qualifies.
You may wish to set up as "self-employed" and reclaim the VAT if you can demonstrate that you will be self-employed after qualification. Best seek the advice of an accountant for that. However, if you plan is to become employed by an airline, then you be liable to repay the VAT.
Cheers
Whirls
You may wish to set up as "self-employed" and reclaim the VAT if you can demonstrate that you will be self-employed after qualification. Best seek the advice of an accountant for that. However, if you plan is to become employed by an airline, then you be liable to repay the VAT.
Cheers
Whirls
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Tax Relief on Training
Does anyone know if in the UK as a sole trader you can claim tax relief on CPL training. If you register for VAT can you also claim back the VAT on this training.
Interested if the training is in UK or USA - it might make a difference.
Interesting thought eh
Interested if the training is in UK or USA - it might make a difference.
Interesting thought eh