Paying for an employee's college through a company

ebixa82

Hi,

I'm an employee in a small Irish company. I am hoping to do an MBA in Smurfit which costs €30,000 over 2 years. I am thinking of approaching my employer about it. I presume if he was to pay for it through the company he could write off the VAT he pays as an expense.

If so what does he need to do? I want to propose this to him but need as much info as possible to help my case.

Alternatively, I was thinking if it could be done along the lines of the Bike To Work Scheme. When I did this, I bought the bike for €1,000 with my own cash. He then added €1,000 onto that month's wages and subtracted €166-Tax payable over 6 months.

Or am I getting this completely arseways?

Thanks in advance

Victor

I'm not sure if VAT is chargeable on education services.

The most efficient way to pay for it is for the employer to pay for it as an exam bonus - otherwise, there may be BIK issues.

If they pay for your MBa, are you willing to stay with them for X years?

ebixa82

Victor wrote: »

I'm not sure if VAT is chargeable on education services.

The most efficient way to pay for it is for the employer to pay for it as an exam bonus - otherwise, there may be BIK issues.

If they pay for your MBa, are you willing to stay with them for X years?

I can't see the boss being willing to pay for it. What I was thinking was the boss pays for it through his company assuming he can write off the tax.

Whatever the net amount he pays, I will then pay him that.

Or is that fraud?

(I am basing all this on the assumption that paying for an employee's education is tax refundable!)

srsly78

If you pay for it yourself there is also tax relief. This would be exactly the same sitation as with salary sacrifice and the company paying.

mitosis

Your personal tax relief will be the same as your employers, so there is no benefit to your employer. If you are intending to reimburse your employer are you effectively going to ask them for a loan?

ebixa82

srsly78 wrote: »

If you pay for it yourself there is also tax relief. This would be exactly the same sitation as with salary sacrifice and the company paying.

mitosis wrote: »

Your personal tax relief will be the same as your employers, so there is no benefit to your employer. If you are intending to reimburse your employer are you effectively going to ask them for a loan?

It costs €15,000 per annum. If my employer is able to write it off as a company expense and so effectively pay a net amount of say €12k (for arguments sake), then I would pay him that €12K up front.

It means he ends up actually paying nothing, and I pay €3k less for the course per annum.

I would not ask my employer for a loan, I have the money in savings myself, I'm just trying to see if it is possible to reduce the amount I pay in the end.

I may be making no sense here, so thank you for your patience!

srsly78

What is this magical e3000? From vat? That doesn't apply to education as others have stated.

ebixa82

srsly78 wrote: »

What is this magical e3000? From vat? That doesn't apply to education as others have stated.

Yes VAT. It's not a magic figure. As I stated, a random figure for arguement's sake!

If it's not possible on education services then I guess case closed, however I spoke to someone who did it last year and paid the 30K less VAT as it was done through his father's business. Not sure how he did it but wanted to see if what he did was above board.

okiss

Revenue have a list of courses which you can claim back 20% of the fees.
You will not pay vat on this type of course - Vat is value added tax and does not apply to education courses
If a company is vat registered they pay vat on the products/services they sell to the public but can claim back vat on the cost of materials they use as part of the business.
Your friend would have claimed back 20% of the fees as above and not as vat.

I have a friend who has an MBA among there qualifications. They told me that an MBA is no longer a instant big job with a high wage qualification that it once was. They did the course when working full time and found it hard.
This person came top in there college final year exams and would find the mensa tests easy.

ebixa82

okiss wrote: »

Revenue have a list of courses which you can claim back 20% of the fees.
You will not pay vat on this type of course - Vat is value added tax and does not apply to education courses
If a company is vat registered they pay vat on the products/services they sell to the public but can claim back vat on the cost of materials they use as part of the business.
Your friend would have claimed back 20% of the fees as above and not as vat.

I have a friend who has an MBA among there qualifications. They told me that an MBA is no longer a instant big job with a high wage qualification that it once was. They did the course when working full time and found it hard.
This person came top in there college final year exams and would find the mensa tests easy.

Yep, I'm hearing that alot from various sources myself. However, I'm working in a job at the moment which once had a massive salary straight out of college and great prospects, to something that is stagnant and essentially a dead end.
MBA, while not what it once was, can't do any harm.
Will do it part time over two years so I can still earn and it is not as intensive to do.

So it's possible for me to claim back 20% of fees via revenue. That's good enough for me. Thanks!

srsly78

You don't claim back the fees, you get tax relief... Not the same thing - if you didn't pay any tax then you wouldn't get anything back.

http://www.revenue.ie/en/tax/it/leaflets/it31.html

ebixa82

srsly78 wrote: »

You don't claim back the fees, you get tax relief... Not the same thing - if you didn't pay any tax then you wouldn't get anything back.

I'm getting 20% off the fees, I don't care what it is tbh!

dearg lady

ebixa82 wrote: »

I'm getting 20% off the fees, I don't care what it is tbh!

It won't make any difference to you IF you are paying enough tax to get the full amount of relief, but a lot of people pay little or no tax and then wonder why they can't get 'tax back'

ebixa82

dearg lady wrote: »

It won't make any difference to you IF you are paying enough tax to get the full amount of relief, but a lot of people pay little or no tax and then wonder why they can't get 'tax back'

Unfortunately I reckon I'm paying more than enough.

Thanks for all your help.

Victor

mitosis wrote: »

Your personal tax relief will be the same as your employers, so there is no benefit to your employer.

Employer's PRSI?