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- Work-related training can be paid for via salary sacrifice and is exempt from tax and national insurance contributions for the employee, as long as it is directly linked to work.
- Non-work-related training can be offered to staff through a learning account or a voluntary benefits plan.
- A learning account enables an employee to save a set amount of money each month for a year to pay for a course or activity of their choice, and the employer will contribute an additional sum, normally up to 50%.
Training courses don’t have to be work-related to help an employee’s professional development, says Tynan Barton
Whether it is work-related or not, the opportunity for staff to learn new skills and expand their knowledge can bring great benefits to employers in terms of new expertise brought into the workplace.
Employers will usually provide the training an employee needs to perform a role, but other courses can also be offered, funded by staff either through a voluntary benefits scheme or a salary sacrifice arrangement.
Work-related training and development courses are eligible for employee tax and national insurance (NI) exemptions when offered through salary sacrifice, but they must comply with HM Revenue and Customs (HMRC) rules (see www.hmrc.gov.uk/manuals/eimanual/eim01210.htm).
Paul Bartlett, head of reward and benefits at Grass Roots, says that although training must relate to work, it can include a wide range of practical and theoretical skills. This gives staff a lot of choice in the courses they can take up. “[Examples are] accountancy or business studies, which they think would improve their overall skills, but which their company would not necessarily pay for.”
Non-work-related training through voluntary benefits
Although it does not get the same tax breaks, non-work-related training can also be offered through voluntary benefits. HMRC is clear that if the purpose of training is to reward an employee, payment or reimbursement is not tax exempt. But Gareth Ashley-Jones, head of flexible benefits at Aon Consulting, says helping people to grow and develop in any way can benefit an organisation. “It is part of creating a learning culture in the belief that if you can get the old grey matter churning, it actually benefits a business as well as the individual.”
An employer can offer also non-work-related training through learning accounts. Here, the employee makes a commitment to put some money into the account each month for a year, through deductions from their net salary. The employer then adds a contribution, normally about 50%. The money is available to the employee from the start of the scheme, but if they withdraw it early, deductions from their salary will continue.
Staff find and pay for their chosen course and hand the receipt to their benefits team or provider to be reimbursed from the account. This is a benefit-in-kind, so tax and NI will be deducted. However, this means there are no restrictions on the type of course chosen. Chris Downing, client experience manager at Lorica, says: “It could be DIY skills, learning a language or arts and crafts, as long as employers make employees aware that it is not salary sacrifice if it is not work-related.”
Opening the door for staff to take up scuba diving or jump out of a plane is fairly rare, but it helps an organisation’s employer of choice credentials, says Jeff Fox, head of consulting at Benefex. “They are saying ‘we support your development and demonstrate that by giving you the option to put money aside which we will also contribute to’. Not many organisations have done that.”
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Read more about voluntary benefits