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  • Expenses and benefits A to Z

School fees of employee's child

This guide tells you what the reporting, tax and National Insurance contributions (NICs) requirements are if you pay the school fees of an employee's child.

The rules differ depending on the way you pay the fees - in particular, whether the contract with the school is yours or your employee's.

On this page:

You reimburse the fees to your employee

Definitions or restrictions

Your employee contracts with a school for the education of their child and pays the school fees, but you then reimburse them.

What to report, what to pay

The amount reimbursed counts as earnings, so:

  • add it to the employee’s other earnings
  • deduct and pay PAYE tax and Class 1 NICs using your usual payroll procedures

Work out the value to use

The value to use is the amount you reimburse to the employee.

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Your employee contracts with the school, but you pay the fees directly

Definitions or restrictions

Your employee contracts with a school for the education of their child, but you pay the fees directly to the school.

What to report, what to pay

For employees earning at a rate of less than £8,500 per year:

  • report on form P9D - section A(2)
  • add the value of the benefit to the employee's earnings when deducting and paying Class 1 NICs (but not PAYE tax) through your payroll

For company directors or employees earning at a rate of £8,500 or more per year:

  • report on form P11D - section B
  • add the value of the benefit to the employee's earnings when deducting and paying Class 1 NICs (but not PAYE tax) through your payroll

Work out the value to use

The value to use is the amount of the fees you pay.

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You contract with the school and pay the fees directly

Definitions or restrictions

The contract for your employee's child's education is between you and the school, and you pay the school fees directly.

What to report, what to pay

For employees earning at a rate of less than £8,500 per year, you have:

  • no reporting requirements
  • no tax or NICs to pay

For company directors or employees earning at a rate of £8,500 or more per year:

  • report on form P11D - section M
  • pay Class 1A NICs on the value of the benefit

Work out the value to use

The value to use is the amount of the fees you pay.

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Where to report - understanding the £8,500 threshold

It's important to choose correctly between forms P11D and P9D for each employee. The form to use depends on the whether the employee is a director of your company and on whether their earnings are above or below an annual rate of £8,500. For more information - including details of what's included in the £8,500 threshold - follow the link below.

End-of-year forms at a glance

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Technical guidance

EIM00580: Employment income - pecuniary liability

EIM20020: The benefits code - what are benefits?

NIM13180: Class 1A NICs - establishing the contractual arrangements

NIM02270: Class 1 NICs - payment of bills

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