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HMRC internal manual

Employment Income Manual

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

Sections 250 and 251 ITEPA 2003

An employer may recruit an individual as an employee on terms that include the offer to reimburse the costs of training that the individual started, and perhaps completed, before the employment began (‘pre-employment training’).

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Silva v Charnock (SpC332)

Where such an amount is paid, the employers and/or the employee may contend that the Special Commissioner’s decision in Silva v Charnock (SpC332) supports their argument that the reimbursement of costs incurred in relation to pre-employment training 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.

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Points to consider

The definition of work-related training in section 251 ITEPA 2003 is intentionally broad in order to recognise the wide variety of activities that justify exemption. Each case must be considered in the light of the specific facts including:

  • the nature of the link between the training and the employment
  • the relevance of the training itself
  • the duties of the employment
  • when the training was completed

In many cases this link will be straightforward, especially where the training is commenced at a time when the individual already holds an employment and the purpose of the training is clearly relevant to either the performance of the duties of that employment or a related employment (see EIM01230). However, personal development that an individual undertakes of their own accord, at their own expense, and at a time when no specific employment is in view will rarely qualify as work-related training. It does not become work-related training simply because a new employer subsequently offers and makes a payment of an amount equivalent to the costs previously incurred by the employee. For example, an amount received on accepting or commencing an employment that is equivalent to tuition fees incurred in relation to a course of general education (including college and university courses) undertaken at a time before there was any demonstrable link to a specific employer or an employment will not normally qualify for exemption under section 250 ITEPA 2003.

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Despite what is said above, there will be some cases, including those similar to Silva, where the link between the pre-employment training and the duties of the employment will be sufficient for the reimbursement to qualify for exemption under section 250. For example, if an individual accepts an offer of employment from a new employer, to start work in the reasonably near future, and the individual then pays for training relevant to that job, exemption will be due if the employer makes a payment to reimburse those costs after the employment has begun.