Tax relief on training.
 

Now that NVQ's have been done away with, does anyone know of what tax relief if any applies to flying training on a self funded basis, whilst still maintaining current employment ?????

Hi, Avrodamo (North Yorkshire was always a better force! http://www.pprune.org/ubb/NonCGI/tongue.gif)

One avenue you may consider -

An accountant may give you sound advice on setting up as self-employed, offsetting aviation costs against expenses, and particularly getting VAT registered on a voluntary basis to reclaim VAT.

But you'd need to demonstrate to the VAT man that you were running (or hoping to run) a business (even training costs count).

Just an idea.

Cheers



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If you're not on the edge, then you're taking up too much space.

I thought about this a while ago. I already have a limited company that I could use which is VAT registered and trades in the IT sector.

If you did pay for training through a company, you could offset the whole training cost against tax and claim back the VAT. You could even claim reasonable expenses during the training against tax.

I spoke at great length to my accountant about this, and his advice was not to go ahead: he said he would be very surprised if the Inland Revenue would allow the training to be tax-free, as it was obviously training in a different sector to that which the company is trading. Even though any training which 'enhances the earnings potential of the company' is tax-deductable, the Revenue have seen most tricks before, and if they don't like it, it's up to you to prove at a tax tribunal that it is genuine.

If you did go ahead and do this, and the Revenue didn't like it, they would judge that you personally had a 'benefit-in-kind' from the training, and tax you as if that money had been paid direct to you. Customs and Excise would also want their VAT back as well. Net result: no gain. The Revenue is also getting tougher with people who they think are really trying it on, and might want to bring charges against you: the law was made tougher recently regarding tax-evasion.

If you don't already have a company that is trading, you can't just set up a company to pay for your training, as this is a 'Sham Company' and that's illegal.

Anyway, in the end I decided not to go ahead with this: my personal tax situation is in enough of a mess with this whole IR35 fiasco, basically allowing the Revenue to turn round at any time in the next seven years and say I owe them a sh!tload more tax: adding extra indecision from expensive training sat on the company's books that may or may not end up a benefit in kind would be too much for me.

Dreamcatcher:
Sorry, but Hampshire was always the best force, until the government started meddling with Europe. Then Europe started meddling with the government - now all is a pile of poo!
But here is not the place to vent my anger!

"I am going to enjoy this!"

Tax relief for training??
 

Lifted this from an article on the internet:

(Can anyone confirm if this is true, or is it already taken into account when you are billed by the training college??)


"....NVQs and Tax Relief for Commercial Pilot Training

note: see NVQ page for latest news

While the cost of paying for your CPL/IR training can undoubtedly be a major concern, help may be at hand in the form of tax relief to the tune of 23% (or 40% if you’re in the higher tax bracket). This is applicable on any flight training towards a CPL/IR as the training is in line with the current National Vocational Qualification (NVQ) scheme. NVQs can be applicable to any number of training courses, from catering to shop retailing to learning how to be a commercial pilot. It refers to a series of levels of competence which, once completed can, according to the level achieved, result in a qualification considered equal to a senior management position. With the CPL training curriculum falling into line with existing levels of NVQ assessment, the tax relief becomes available.

Of course, there are certain criteria which must be met before application for tax relief can be accepted. These include that the applicant must be a resident in the UK for at least 183 days a year, isn’t entitled to any other tax relief and isn’t only undertaking the training for recreational purposes. What this means is that if are applicable you will only be required to pay 77% of your training fees, with your training college able to claim the rest back from the Inland Revenue.

For further details of NVQ tax relief, either contact your training college or the Aviation Training Association on 01494-445262. ......."


What do you think??

As far as I know it used to be the case but is no more.

Would be very interested to know.

Long gone.. sorry.

pointless amount of paper work to achive a HND in 'flying stuff' only usefull if you wanted to go on for a uni degree. didn't take into account that the CPL/IR at the end of it would be proof itself you had dont the work. another bit of daft goverment publicity, when commercial flight training should be regarded in its own right as a qualification.

I saw something about this issue in IR119 which I have a copy (althougt I cannot find it anymore in the IR website) which states that when the NVQ cannot be applied there is what is called an "alternative route" which effectively works exactly in the same way as the previous NVQ scheme. I cannot provide more details now, but I can provide the text later on if that is of interest. There is also a number to call for more information. The only thing I remember is that it applies to over 30's only and for full time or substancially(?) full time study.

Anyone heard of this "alternative route"?

TheNavigator

Aahh.....the benefit of hindsight.

What I could do with NVQ!!

Navigator,

As far as I know what you are referring to is VTR (Vocational Tax Relief) which has also now gone. If it really has been replaced by anything else I'd love to know about it, but sadly I don't think so.

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Whirly

To fly is human, to hover, divine.

I remember something about this Navigator. Yes it was for over 30s and the course had to last over 2 weeks and (I think) under 6.

Best bet would be to ring someone like OATS and ask - they're sure to know of any tax dodges to bring down th efees and attract more students.

This is what I found about this issue. Aparentely one of the exclusions of this new system is precisely Pilot Training. Very unfortunate this is ....

As the new national system for Individual Learning Accounts is introduced, Vocational Training Relief (VTR) is to be withdrawn with effect from 31 August 2000. Payments made upto and including 31 August 2000 will be eligible for relief. Payments made after that date will not be eligible.
Further information about Individual Learning Accounts is available on this website or by ringing the Individual Learning Account Centre
on 0800 072 5678. http://www.dfee.gov.uk/ila

Anybody thought of starting out an activity as a self employed and getting relief from the training provided for the exercise of the profession?

[This message has been edited by TheNavigator (edited 12 June 2001).]

TheNavigator, it sounds like you feel the same way I did when I realised that VTR2 had been disbanded. It was one benefit of being 30+. I too looked at the Individual Learning Account system and indeed now have one! But what is it worth? I have yet to find the answer to that one.
Not wanting to get political but the removal of the Tax relief is discourages personal development, something that was well touted in the "education education education" blah.

So tax relief has gone - we get over that.

ILA's are here - they specifically ban "flying lessons" so I accept that the government won't hire the aircraft and instructor but are you sure that it really bans "Pilot Training". ie ground based theory, exam fees etc toward a commercial licence?

The other problem is finding a training establishemnet that:
1) Has heard of ILA's
2) Has done anything about it to enable you to get a discount.


Has anyone used an ILA to any effect in the aviation world?

Is it not in the interests of the ground schools to make their expensive training courses accessible to more punters? Even if it is a "mere £150" I recall a few years ago almost every advert had some mention of NVQ discount but today there is no mention of ILAs.

Navigator,

I'm doing just that. I'll be filling in all my expenses for the last tax year, and asking that they be offset against future profits. My accountant says that should be OK, but advised against offsetting them against current profits from my other business (I'm self-employed anyway at present). The reason is that if I either don't get work or am not self-employed as a pilot in the future, the IR may claim back their due with interest!

I've also VAT registered so I can claim back the VAT paid for training. Most helicopter students seem to do this and I even phoned the VAT helpline who said it was fine.

The snag is that none of this may work if you're not likely to become self-employed and earn something eventually. Most helicopter instructors are classed as self employed - but I'm not sure this is the case in the f/w world. Worth looking into though.

------------------
Whirly

To fly is human, to hover, divine.

Whirlybird,

Can you elaborate on how you go about becoming VAT registered.

Thanks in Advance

Cypres

Cypres,

My accountant had the forms and is helping me with it. But if you ring the VAT Helpline, 0845.010.9000, they can answer any questions and send you everything you need. You can backdate training expenses for six months too - they volunteered this information when I asked about it; they're very helpful. Better than my accountant in fact; he's a bit vague on VAT - especially for helicopter training!

------------------
Whirly

To fly is human, to hover, divine.

We wouldn't be in this situation if Gordan Brown hadn't abolished NVQ and VTR for professional pilot training.
So who was it that voted them back in last week ?

NOT ME !

Nor Me! Funny how you never meet a labour voter! It seems the only ones that openly declare it are soap-dodging vermin!

"Education Education Education" they Bliared.

It is not just Pilot training that has been hit by the axeing of Vocational Tax Relief.

The other little bombshell is that for those that paid before the 31 Aug 2000 deadline to get the NVQ but intend to undertake the training after that date eg money on account with a training provider - THE TRAINING HAS TO BE COMPLETED BY 30 JUNE 2001 - thats about 2 weeks off. Otherwise the NVQ on training after that date is ineligble and your training provider will have to refund the Inland Revenue for any tax relief on your account, which they will take from you!

This has been checked with the Inland Revenue VTR section!

MTMA

VAT and tax deduction
 

I'm considering an Ab-initio ATPL soon and am wondering if it's possible to set up a company VAT register deduct the cost of the course from this year's income tax bill (I am currently employed full time) and get the VAT back as well. If this is possible then it could save thousands of pounds!

Have I just saved us all a few bob at Mr Blair's expense of is there a reason why this can't be done??

Any accountants out there care to comment?

Desk-pilot

This is a difficult one. Halfway through my CPL(H) training an instructor told me I could claim the VAT back. My accountant said I couldn't, but to ask the VAT helpline. I did, and they said it was fine. I then discovered most helicopter pilots seem to have done this anyway. I then asked my accountant the same as you; if it's a business, can I claim the tax back? He didn't think so, but said I could try it, but it would be safer to ask to offset the expenses against future earnings. Otherwise they could come back later and demand the money back with interest, if you didn't get a job. Well, I've tried it this year, just sent in my first VAT return, and this year's tax return, and I'm waiting to find out. Ask me next year.

I am led to believe that if you are intending to use the qual as part of your " Business" you can claim all Vat, as well as the training cost against any profit as an expense, seems to have worked thus far for me, on the PPL(H) with the intention of going onto CPL(H).
But only time will tell!! :)

I discussed this long and hard with several accountants as I run a one-man company. The upshot was that if I could guarantee that my CPL would generate income for the company, I could run the training cost through it and get at least partial tax and VAT relief. However if it transpired that there was no evidence of income generated by the training in the company's books (ie. no aviation-related income), the Inland Revenue and Customs and Excise would view the training as a benefit in kind and tax it.

Although there seem to be a fair few CPL(H)s out there instructing through their own company (which would be justification for ofsetting training in this way), I'm fixed wing and there are relatively less CPL(A)s doing this.

At first I thought I'd suck it and see, however I changed my mind because I figured that the last thing I'd want when I'm skint after I've got my licence is a fight with the Inland Revenue.

Also note that I already have a solvent, established company which has been profitably trading for a few years. Setting up a company just to dodge tax and VAT is illegal as it is a 'sham company'.

Thanks fellas - sounds as if this might be worth pursuing as I intend to instruct until I find a job after ATPL. Next step find a good accountant I guess.

Appreciate the info.

Thanks,

Desk-pilot

Desk-Pilot interesting concept. However here's a couple of thoughts (IMHO) that you may like to be aware of - of course I may just be mucking things up;

1. A company cannot off-set against VAT unless it is VAT registered. VAT registration is only applicable when the company reaches an income threshold (£44Kish?), and cannot be applied retrospectively and therefore all VAT incurred on training whilst the companies income is below the threshold cannot be applied.

2. If you were going to try and use your first income as company income (effectively pay yourself to fly) then be careful that the income is not taxed twice (once as PAYE and once as profit in a company). You can lend the company the money but that doesn't count as income - and you've paid tax on it already and you might wander into a capital gains problem in the future.

3. The inland revenue take a very dim view of one man bands being set up for tax purposes. If you come to their attention in this way they are likely to review your last 7 years earning in their favour. I've been PAYE for the last 5 years - and each time I complete a return I owe them another £500 - go figure :p

4. The only way I could actually see this working would be to use the company as a legal vehicle to reduce some of the incurred costs. For instance - if you created a "training group" with a C152 (e.g.) as it main asset and sold shares to a number of like minded training PPL(a) stude types - then you could reduce your costs - which is after all what you really want to achieve. You'd have to contract with a local school for an FI but you could try and off-set some of the cost by allowing the school to use the airframe when your "group" don't want it.

The only problem with option 4 - would be the high insurance and liability costs incurred. Also one plane operations suffer severely if the asset gets broke.

An interesting option however :)

You can actually self register for VAT before reaching the threshold. If you pick up publications;
Notice 700/12
Notice 700/21
Notice 700/1
Notice 700/15
Form VAT1
Notice 700

These will give you the details of becoming VAT registered and what its all about. You can request these from 0845 010 9000.

P.S The threshold is now £54,000

Regards
Homer :D

Are ATPL training costs tax deductable?
 

I have just been scanning www.avasp.com and came across something called VTR2 (Vocational tax relief 2) Apparently you can qualify for tax relief if you can comply with the following:
You must be aged 30yrs or older
You are expected to train full time
Your training must last for a minimum duration of 4 weeks and a maximum duration of 12 months
You must embark upon a professional course of training with a view to working within the industry thereafter

If this is true you lot owe me a beer! I'm going to try and phone the IR today

(Anything to stop Prescott having more money to waste on traffic calming and speed cameras!)

Desk-pilot

VTR was a lovely little scheme that Brown killed off on a budget day 3(?) years ago under some tripe about "closing loop holes for private pilots to claim tax relied on their hobby"... Grrrr!

The IR changed the rules that the NVQ4 in Piloting of Transport Aircraft was no longer recgnised for the purposes of VTR. VTR2 was simply the same scheme for higher rate tax payers - most mortals came under VTR1.

There was a scrabble a while back by various schools to 'attach' some element of - say - airline managament & economics onto ATPL courses. This was largely rubbish but could in some circumstances be classified as vocational training able to attract VTR still (Vocational Tax Relief was still available for all sorts of other trades and professions).

The beauty of this work around is that the school can charge - say £500hr for the 'airline management & economics' lessons. And then for the rest of the course £5hr for the ATPL groundschool proper... hence you get VTR on 90% of the COST of your course based on perhaps 5% of the actual LESSONS.

In this manner VTR in flying training continued to exist to some degree and I gave out full details of this advantageous scam at the time.

However with the implementation of JAA it all died a death. I would be suprised if you will be able to claim anything under VTR2 for JAA commercial training. However, it is always worth talking to the tax man as your personal circumstances may allow some room for manouvere.

Some people used to register themselves as a sole trading company engaged in some kind of flying business and then were able to claim hours building and materials as a business expense attracting VAT relief. However, this is a minefield and you should seek professional advice. I think the savings these days a minimal due to the move from hours to approved instruction.

Best of luck and do keep us all informed,

Cheers,

WWW

nvq inland revenue may want tax back
 

anybody any views on the nvq and ppl h, cpl h, i am slowly hour building and studying cpl exams but with slow progress due to jar caa exams etc etc

Where did you hear that?

The thread title does not reflect the content????

TRIMTRABB,

I spotted that. My question was to the title. I've ignored the content as I do not see where it fits in.

PS

Yeah, come on daay41126. This title will make a lot of people jumpy - whats it all about?

is this a rumour thats started as a result of the ILA situation -

As I understand it NVQ was available up to the end of last tax year. Any flying training up to that point was VALID for NVQ.

Any money paid before and used after the end of the last tax year is NOT VALID for NVQ and according to a Revenue statement (issued some months ago) will require this to be refunded.

I did remember reading a copy of this statement...

I'm currently looking for a copy of this to show you it is not rumour but fact.

Quarternion,

Thanks for the clarification. I thought this was potentially yet another kicking in a continuing 'trail of bad luck'! -

TT

Yes, any training for which you claimed NVQ tax relief but had not completed by June 30th 2001 may be claimed back from the tax man.

I know of many who claimed tax relief for all their training at the time of abolishment, and have yet to complete. This could potentially cost 1000's.

<img src="eek.gif" border="0">

Claiming back tax on training
 

Can the cost of professional training be offset against your income tax when you start working as a pilot?

The reason I ask is that like most of the people reading this forum I'm going to be left with a rather large debt when have my shiny new fATPL and so I'm thinking of ways to alleviate the financial burden.

Im sure in the days of old when airlines sponsored cadets, the training costs incurred were considered company expenses. So in this day and age when we're all paying lots of money for our training (most of it borrowed) surely we should be allowed to offset this against the income tax we would pay as soon as we have our first flying jobs?

Has any one tried this getting anything back and if so with what success?

Pilot Training and Tax
 

Does anyone have an understanding of the applicable tax law regarding flight training?

I assume that it is not an allowable expense against schedule E income but has anyone ever tried to put there training costs into a company and get some money back from the revenue that way?

Any suggestions??

WND123