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Looking for relief

Pressure is mounting on the Inland Revenue to cut teachers' tax bills, writes Neil Merrick.

An estimated two-thirds of teachers have bought personal computers which they use at home to prepare lessons and deal with school administration. According to some tax experts and teaching unions, it is time that such an important investment was recognised as part of the National Grid for Learning, and teachers offered tax relief.

At the moment teachers get tax relief only on union fees, membership of other professional bodies, special clothing for subjects such as physical education and course fees for further training (see box).

The self-employed can claim tax relief on heating and lighting bills incurred by working at home, and to cover the year-by-year depreciation in value of equipment such as computers. But any teacher who tries to claim tax relief for costs linked to home-working is almost certain to be rejected.

Inspectors argue that it is the teacher's decision to buy a computer and use it for work during out-of-school hours. Bernard Oster, managing director of Personal Taxation Services (PTS), says home-working is a contentious area which his company, established four years ago to help taxpayers reduce their bills, is looking into with the trade unions.

It could become the subject of a test case, with the result resting on whether staff have sufficient access to their place of work at evenings and weekends. "It depends whether teachers work at home because they have no choice or for their own convenience," says Mr Oster.

When it comes to buying computers, he adds, tax inspectors will ask whether it is an essential tool of the job. "If the answer is no, then you are not going to get any tax relief. If the answer is yes, then he will ask why the school is not paying for it."

PTS offers free assessments to teachers and other employees, but charges 35 per cent of any money recovered from the Inland Revenue. More than 1,200 members of the Educational Institute of Scotland, which has been working with PTS for two years, have received tax rebates.

Most of these, however, are understood to be the result of the Inland Revenue holding incorrect personal details about teachers, rather than staff discovering ways of claiming extra tax relief.

Martin Benson, of accountants Coopers and Lybrand, says teachers should claim on computers. "Teachers should increasingly be able to claim that a computer is essential for their work, and show that school budgets do not allow for the purchase of it," he says.

Most teachers pay tax through pay-as-you-earn and do not fill out tax returns, which are mainly for the self-employed and people with complex tax affairs. By not filling out a return, teachers avoid the traumas of self-assessment but miss out on the chance to claim even the relatively small amount of relief they are entitled to on their union fees.

The Association of Teachers and Lecturers has been at the forefront in calling for tax relief on home computers, but Martin Pilkington, its head of legal and member services, admits that most members do not seem concerned about the issue.

Paul MacLachlan, assistant secretary of the National Association of Schoolmasters Union of Women Teachers, says the fact that nearly 9,000 of its members have used PTS shows an increasing awareness of tax issues.

He is pleased that inspectors recently conceded that track suits and training shoes should attract tax relief, and says there is a "genuine sense of grievance" that teachers receive no recompense for working at home.

But Maurice Fitzpatrick, a senior tax partner with accountants Chantrey Vellacott, warns that tax is a two-edged sword. If teachers using their own computers for work became eligible for tax relief, the Inland Revenue would almost certainly attempt to recover some of the money it lost by classing school-owned laptop computers as a taxable benefit.

This would mean teachers who took them home for their personal use would have to pay extra tax in the same way as an employee does with a company car.

"Inland Revenue rules are notoriously narrow and ungenerously enforced. It would resist a claim by teachers who work at home very ferociously because most professionals take work home at some stage," Mr Fitzpatrick says.

PTS: Freepost SK1892, Stockport, Cheshire SK42YD

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