To stay successful as a business and compete in tough market conditions nowadays, you need to stay abreast of changes in your industry and keep your skills and knowledge constantly updated. H.M.R.C. recognises this fact in their taking into account eligible training and educations expenses for tax purposes.
Can I claim?
Are you thinking of investing in your business skills or those of your staff? Feel free to go ahead and book that training course you have been looking into! Like any trade or professional magazine subscriptions which help you stay informed about your industry, relevant training courses are also an allowable claim - but only if they apply to expertise you already have (business related). New expertise courses are not valid for tax relief.
Work through our simplified questions on SimpleTax to navigate through the ‘tax legalise’. On the platform this is teased out for you. You can declare your training expenditure amounts in Self-Employed expenses - "Training - Training Courses".
Of course this leaves room for some grey areas, but if you are able to make the connection in terms of building upon expertise, or diversifying into new areas of business, then it is worth considering inputting these training costs for relevant training into your tax return.
H.M.R.C.’s criteria reads as follows: “Provided it is incurred wholly and exclusively for the purposes of the trade carried on by the individual at the time the training is undertaken, expenditure on training courses attended by the proprietor of a business (either as a sole trader, or in partnership with others) with the purpose of up-dating their skills and professional expertise is normally revenue expenditure, which is deductible from the profits of the business.”
The key phrases here are probably: “wholly and exclusively for the purposes of the trade” and “at the time the training is undertaken”.
To shed further light on the business development issue, there is a test they apply to clarify what is eligible, however, as follows:
“In considering the question of purpose, you should not take an unduly narrow view of whether the content of any particular course only up-dates existing skills of the individual. But if it is clear that, for example, a completely new specialisation or qualification will be acquired as a result of the expenditure, it is unlikely that the expenditure will be wholly and exclusively for the purposes of the existing trade.”
The key word here is ‘unlikely’; After checking their guidance ‘business purpose’ guidance link, if you are so inclined, it is up to you to make the best case you can for the significance of the training. Nevertheless, you don’t have to put yourself through too many testing times over this.
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