Is it tax-deductible? No. 5. Training

First published on 17 December 2020 by Alastair
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  • HMRC
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  • Accountancy

If you can claim for training that, according to the government website “helps you improve the skills and knowledge that you use in your business,” why can’t you claim for training that lets you expand into new areas of business, including anything related to your current business”? Surely, HMRC can’t tell the difference?

If you are self-employed, the rules regarding what can be claimed and what cannot in terms of training costs are very specific but can be confusing all at the same time.  The basic rules are:

  • Training to keep your current skills up to date are allowable.
  • Training to learn new skills are not allowable.

If you are self-employed and you attend a training course to keep your current knowledge or skills up to date then this expenditure is allowable.  These rules also apply to training courses undertaken to maintain membership of a professional body.

For example,  George is a self-employed GP.  He goes on a training course to learn the latest techniques in his general area of practice at a cost of £1,000.  George can claim this training cost as a deduction when calculating his taxable business profits.

However, if you attend a training to acquire a new skill then this will not be allowable.

Using the above example, suppose George attends a training course at a cost of £5,000 to learn about a specialist area not currently used in his practice, this cost would not be allowed as it not used in his current business.

The reason for this is that HMRC view any self-employed training costs which enable you to acquire a new skill, as you creating a long lasting intangible asset which can only benefit the individual and not existing business.  Effectively any such self-employed training costs enable you to carry out your trade rather than enhancing your ability to run your current business. 

For example, Hector is a trainee dentist.  He can’t claim the cost of his degree course necessary to become a dentist.   However once he becomes a self-employed dentist, any training costs he incurs as part of his continuing professional developments would be allowable, together with any associated costs such as travel, books etc.

It should also be noted that the training for some ‘new skills’ are allowable, if they are skills to help you run your business, rather than the learning the trade itself.  For example, if you take a first aid course so that you are trained should their be an accident involving one of your employees, then this would be allowable as (provided you are not a first aid instructor!) then it is not directly part of your trade.

So if you are thinking about starting a new self-employed trade, consider whether you can start the business before undertaking any training, if so, you may find that any training costs you incur can be deducted for tax purposes as they are updating an existing skills.  However, it may be worth checking with your advisor before undertaking the course, just in case.

Chris Leslie and Vivian Linstrom, M&S Accountancy & Taxation


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