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HMRC internal manual

National Insurance Manual

Class 1 NICs: Earnings of employees and office holders: Training and similar costs: Individual Learning Accounts (ILAs)

Regulation 25 and paragraph 3 of Part VII of Schedule 3 to the Social Security(Contributions) Regulations 2001

Individual Learning Accounts were discontinued with effect from 24 November 2001. Theinformation which follows is therefore provided only for information purposes in the eventthat it is needed in relation to past cases.

The Department for Education and Skills introduced the Individual Learning Account (ILA)framework to provide people with discounts for a wide range of work-related training aspart of the strategy for creating a more skilled workforce.

Employers were encouraged to contribute towards the cost of developing theiremployees’ skills but could not place funds directly into their employees’ cashaccounts. An employer generally contributed to an employee’s approved training underthe ILA framework by arranging to be invoiced by the training providers once an employeehad arranged a course.

See SE01310 for further information about the operation of ILAs.

Do not include in gross pay contributions made by an employer, or by a third party on theemployer’s behalf, towards the cost of approved courses if:

  • the payment was made directly to the organisation providing the training for approved courses, or
  • the employee was reimbursed expenses which they incurred as a result of undertaking the course, for example the costs of travelling to a training event.

However, if an employer made a payment directly to the employee’s ILA thesepayments must be included in gross pay and Class 1 NICs will be due.

The legislation relevant to the exclusion from NICs is regulation 25 and paragraph 3 ofPart VII of Schedule 3 to the Social Security (Contributions) Regulations 2001.