EIM01235 - Employment income: work-related training: reimbursement of pre-employment training expenses: Silva v Charnock (SpC332)

Sections 250 and 251 ITEPA 2003

Some employers agree to reimburse the costs of training that an employee started or completed before the employment began. Such reimbursements do not, normally, qualify for exemption under Section 250 ITEPA 2003.

It is implicit in the definition of work-related training in Section 251(1), and related employment in Section 251(2), that the training cannot be “work-related” unless the trainee is employed by the employer at the time when the training is undertaken. Training that an individual undertakes of their own accord, at their own expense, and at a time when no specific employment is in view will not normally qualify as work-related training. It does not become work-related training simply because a new employer subsequently agrees or offers to reimburse the employee’s costs.

Exception

Despite what is said above, there will be some cases where the link between the employment and the pre-commencement training will be so strong that the reimbursement will qualify for exemption under Section 250. For example, if an individual has accepted an employment offer from a new employer, to start work in the reasonably near future, and the individual then pays for training relevant to the job, exemption will be due if the employer agrees to reimburse the costs after the employment has begun.

Silva v Charnock (SpC332)

Employers and employees may contend that the Special Commissioners’ decision in Silva v Charnock (SpC332) supports their argument that the reimbursement of pre-employment training expenses (not within the exception above) qualifies for exemption under Section 250. The facts in that appeal, which the Special Commissioner allowed, were somewhat unusual. The decision will not necessarily apply in other cases where the facts are different.