Expenses and benefits: school fees for an employee's child

As an employer paying your employees’ children’s school fees, you have certain tax, National Insurance and reporting obligations.

What to report and pay

What you have to do depends on who pays the fees.

If your employee pays and you reimburse the fees

This counts as earnings, so you’ll need to:

  • add the cost of the fees to the employee’s other earnings
  • deduct and pay Class 1 National Insurance and PAYE tax through payroll

The contract is between your employee and the school, but you pay the fees directly

You must:

The contract is between you and the school and you pay the fees directly

You must:

Salary sacrifice arrangements

If the cost of the school fees is less than the amount of salary given up, report the salary amount instead.

These rules don’t apply to arrangements made before 6 April 2017 - check when the rules will change.

Additional guidance

The following guides contain more detailed information: