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HMRC internal manual

Employment Income Manual

Employment income: retraining expenses paid by employer: conditions to be satisfied for exemption

Section 311 ITEPA 2003

To qualify for exemption under Section 311 ITEPA 2003 all the following conditions relating to the employee and the course must be satisfied.

The employee:

  • must attend the course on a full-time or substantially full-time basis (The requirement that the course should be full time or substantially full time was removed with effect from 6 April 2005.)
  • must have been employed by the employer full-time throughout the two years up to the time he or she begins the course or, if it is earlier, at the time the employee ceases to be employed by the employer (The requirement that the employee should have been in full time employment was removed with effect from 6 April 2005.)
  • must have been given the opportunity to attend the course and have the cost met by the employer on the same terms as offered to employees generally or to a particular class of employees. (This condition is intended to ensure that opportunities are not restricted to, for example, relatives of directors and executives.)
  • must begin the course while employed by the employer or within one year of leaving
  • must either have left the employment before the course begins or leave not later than two years after the end of it
  • must not be re-employed by the employer within a period of two years of the employment ceasing.

The course:

  • must be designed to impart or improve skills or knowledge which can be used in the course of another employment, including self-employment
  • must be entirely devoted to the teaching and/or practical application of such skills and knowledge
  • must not exceed one year (if it does no exemption is due in respect of any part of the expenditure). (This condition was extended to 2 years with effect from 6 April 2005.)

As regards withdrawal of the exemption where the conditions are not complied with, see EIM05030 onwards.