You may be aware that the cost of training your workforce is tax deductible for your business and a NI-free benefit for them. But, did you know that this exemption can also apply to a day out paintballing, off-roading or hunting for treasure?
It may be obvious that a course in Excel or databases will improve an employee’s skills in an office environment, or that learning about health and safety or first aid may help them at work, but you can also claim a day spent engaging in activities such as archery and It’s a Knockout is just as valuable to your workforce.
The training conditions state that, as long as the training is designed to ‘impart, instil or improve or reinforce any knowledge or skills likely to prove useful when performing duties of any relevant employment’, which includes skills such as teamwork, creative thinking and leadership skills, a business can claim a tax deduction for the cost. It is classed as job-related training.
So, you and your staff can gain new skills and expertise that will be useful in and out of work, and even have some fun, and the company can claim Corporation Tax relief on the cost.
A word of caution.
What you need to be mindful of is the Benefit in Kind (BiK) rules. Employees and directors can be taxed on the value of the training as a Benefit in Kind unless certain rules are met. This BiK charge will apply where the training is provided:
- For the purpose of unrelated leisure activities
- In relation to training unconnected with the employment and is only being provided as an inducement to stay in the job
- As a reward for the director or employee doing their job
So, in terms of team-building days, you must ensure that the activity you choose has a justifiable work-related benefit, like time-management or organisational skills, or those mentioned above.
Bring family and friends!
Here’s another little tip you may not be aware of. If there is no extra cost incurred in bringing along a family member or a friend, the tax exemption can be extended using the rule established nearly 20 years ago in the Pepper –v- Hart case. This says that only the extra cost of adding someone to the course, rather than a proportion of the whole cost, is chargeable as a BiK. So, if there is no extra cost, there is no BiK.
For example, if the company pays for a team-building day where the cost covers up to 20 people, but only 16 employees want to attend, the remaining four places can be offered out to non-employees without incurring BiK costs.
For further details of the legislation containing the exemption and advice on maximising training costs tax breaks, contact Annette on 01922 418111.
