Tax relief takes skill: Confusion reigns over deductions for job training. Andrew Bibby reports

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The Independent Online
THE IDEA of giving tax relief to employees who spend their own money improving their work skills seems excellent. It is two years since Norman Lamont made the proposal and almost a year since relief was introduced. But the reality is that the Chancellor's scheme has so far turned out to be a dreadful mess.

Vocational training relief (VTR) is available to taxpayers and non-taxpayers, who may deduct 25 per cent from their fees when they enrol for qualifying courses. The college or training body claims back the difference from the Inland Revenue.

Higher-rate taxpayers can benefit further by claiming the marginal 15 per cent tax themselves. VTR is not available when an employer pays for training or when students receive local authority or other public grants. The self-employed, who can set training expenses against tax, are also excluded.

For the scheme to work, colleges and training providers must participate by publicising it and by accepting reduced fees from students.

The Inland Revenue admits that fewer training organisations than it expected have become involved. 'The take-up is disappointing,' says Ed McKeegan of the Inland Revenue. 'We estimate that there are between 4,000 and 7,000 training organisations. Approximately 1,600 have registered with us, but there are no more than about 380 at present giving the tax relief. Some training providers see it as an administrative burden rather than an opportunity.'

Only training considered capable of counting towards an accredited National Vocational Qualification (NVQ - or its Scottish equivalent, the SVQ) at levels 1-4 is eligible for relief. The first problem is that the National Council for Vocational Qualifications has yet to approve NVQs in certain fields.

For example, people in personnel, librarianship, broadcasting, the film industry or entertainment are unable at present to obtain NVQs.

Much more of a problem is the fact that NVQs are not awarded on the basis of particular courses attended. An NVQ is 'a set of standards in which you are asked to show your competence', a council spokeswoman said.

This means people would need a detailed knowledge of all the 500 currently approved NVQs and of the units into which each is split (some have as many as 20) before knowing whether a training course could count towards an NVQ. For example, an evening class in information technology is unlikely to qualify. However, one particular part of a Level 2 Business Administration NVQ calls for skill in data inputting: so, via this backdoor route, a basic computing course might in certain circumstances be eligible. The responsibility for finding out whether it is rests with the college or trainer, which could have a reimbursement claim turned down by the Inland Revenue if it gets it wrong.

Even more curiously, it is possible for training courses in England that cannot prove a link to an NVQ to qualify for tax relief by identifying an appropriate unit of a Scottish qualification, and vice versa. Not surprisingly, not all colleges and training institutions are going out of their way to find out.

A further issue is the pilot introduction last year at about 100 test centres of the General National Vocational Qualification (GNVQ), which at level 3 is officially meant to be comparable to A-levels.

As David Kingan, president of the Association of Principals of Colleges, points out, GNVQ students can claim tax relief, but A-level students cannot. 'It is somewhat unfair to be as arbitrary as this. It's not the student's fault a particular course has not been NVQ-accredited.'

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