Bonds and the Taxman
 

Here's one for the cockpit lawyers. Maybe it has already been asked but has got me thinking ..............

If you terminate your contract and find yourself having to pay off a training bond, is this repayment tax deductable?

If this repayment IS tax deductable, if you were to fulfill the required period of employment to satisfy the terms of your bond, by the same token, does this constitute a benefit in kind which you are liable to PAY tax on?

Employers seem to give the impression that they are doing you a favour by training/investing in you to work on their equipment and are trying to prevent you leaving before they have had a return on that investment which implies that they see this investment as of benefit to you therefore must be a benefit in kind.

Likewise, your repaying the bond is an expense that you would not have if you had never had that training/job so it must be an expense directly attributable to your job so must be tax deductable.

Anybody have any experience of this or further thoughts? (must admit, haven't asked the taxmen)

This repayment is not tax deductable.

A "Bond" is not a benfit in kind and is therefore not liable to tax. The only exception might be if the employer chose to pay it for you in which case it may well be.

Having to repay a bond is a financial penalty that you volunteered to at onset. It is a penalty you agree to pay it is not an expense any more than breaking the terms of a fixed rate mortgage would be. Neither of these constitute allowable expenses.

Speaking as an ex-taxman! :)

Jetdriver,

As an ex taxman you may know the answer to this: Is a payout for loss of licence insurance taxable?

[This message has been edited by Paranoid Parrot (edited 18 April 2001).]

PP,

I am afraid I am not very conversant with current IR rules. Ring the local Tax office for better guidance or see a professional Tax advisor.

However I believe that any Insurance payments of this nature would not be liable to tax although the interest on the award probably would be.

Although it probably doesn't apply to your question, awards and interest awarded by a UK court as part of an award for personal injury are not normally liable to tax.

I cannot see how Loss of licence payouts could be subject to tax, however as I say ask for better advice.

In my country it is like this: If you quit the job and have to pay out the bonding to the airline, the entire sum is tax deductable in full. I asked this question to the national tax authorities and have their answer in writing. Good for me, as I recently payed $ 12.000,- to gey rid of my old !!!!ty job.

------------------
nofuzz