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  Mark Brierley April 29, 2011 at 9:03pm

  Yes
• PRO

  Gary RK April 29, 2011 at 9:07pm

  Yes, but there are caveats;

   

  - must not be for reward

  - must not be self financed

  - must be for the benefit of the employers/employees business

   

  See HMRC EIM01210 Section 250
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  Fenlandphil April 29, 2011 at 10:51pm

  There are training grants available from the government, try business link for help.
• PRO

  Phil Voice April 29, 2011 at 11:03pm

  Tim Wettone of Wettone Matthews will be able to help with this.

   

  Tim's a great bloke and extremely knowledgeable; his company looked after our business affairs and I'd recommend his services without hesitation.
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  Tim Wettone April 30, 2011 at 10:42am

  If training courses for employers aren't tax deductible, then my claims for all my CPD courses over 30 years are at risk, which isn't the case I am relieved to confirm.  Actually, training courses are deductible provided you attend them AFTER you have started in business.  The ones that are not deductible are those that provide you with sufficient knowledge to be able to start trading.  They fail the deductibility test as they are not incurred IN the performance of your duties, but before, and are treated as capital and not revenue items. 
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  Fenlandphil April 30, 2011 at 2:00pm

  If you are a director of a limited company you are also an employee of that company, so I guess that would be quite interesting from the capital point of view.
  
  Sue Bell said:

  I did an HMRC course last year and they were very clear that training courses for employees are generally deductable but courses for the employer are usually NOT deductable (unless they are just renewing existing knowledge). Also, if the course isn't deductable then none of its associated expenses are deductable either (like travel / parking costs).

  The argument was that the employers new additional knowledge was a capital asset, and capital expenditure isn't directly deductable against income (although there are various allowances for other forms of capital expenditure).  On the other hand the employee could leave at any time, so his new additional knowledge wasn't 'capital'. The cost of updating employer knowledge is like maintenance of a capital asset, which is deductable.

  I thought it was a lovely argument, but didn't explain why I couldn't claim my training costs in one of the capital allowances.
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  CJ April 30, 2011 at 6:08pm

  felandphil were did you find the trianing grants, ive tried searching the site thanks?
  

  As usual anything to do with government/inland revenue is a bit of a mind field, as im about to role with starting my business im thinking ahead to further training once I get going.

   

  cheers
• 

  Fenland Fencing May 1, 2011 at 4:20pm

  Our accountants broad-brush stroke advice was if the course is to learn a new skill = not deductible, to update an exisiting skill/knowledge i.e. refresher = deductible.

   

  [Just to add we are a Ltd Co]
• 

  Tim Wettone May 1, 2011 at 5:13pm

  Hello Sue

   

  I don't mind you disagreeing with me.  I think it is more a case of people saying the same things but in differing levels of detail.  Perhaps I need to be more specific in future, whereas I was rather hoping to come across with a broad-brush reassurance to the original poster.

   

  What I would say in addition is that the items you quote are taken from the Tax Inspectors' Manuals, which are not legislation, but their guidance on how they interpret legislation.  It is open to taxpayers to take a different line, provided they are ready to justify themselves (although that is rarely a wise course of action, due to the potential cost involved).  BIM 42526 also states:

  "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."

   

  I believe the essence of what they are saying is that they are not going to go overboard in challenging training costs.  There is obviously a difficult line between a "new specialisation" and an extension of knowledge but, having been in practice for over 30 years, I have not once experienced a challenge by HMRC on training costs of an existing business, only new businesses.  That is really what I was trying to say in my original post.

   

  If a "new specialisation" has been commenced, it is arguable as to whether it should be separated as a new trade, in which case the question of allowability becomes clearer.

   

  Sue Bell said:

  Sorry Tim, but I beg to differ. Your CPD may well be deductible but it is not true to say that all post-trading training will be. As the proprietor of a business (sole trader or partner) you must apply the capital/income test. The relevant parts of the rule book are BIM42526 and BIM35660 – I have reproduced the important bits below (the emboldening is mine).

   

  BIM42526:

  … 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 profits of the business.
  
  … 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.

   

  BIM35660:

  Where attendance at a course is intended to give business proprietors new expertise, knowledge or skills, which they lack, it brings into existence an intangible asset that is of enduring benefit to the business. We take the view that the expenditure is therefore of a capital nature, and deduction is prohibited by ICTA88/S74 (f).
  
  On the other hand, where attendance is merely to update expertise etc. which proprietors already possess, the expenditure is normally regarded as revenue expenditure and will be deductible if it satisfies the ’wholly and exclusively for the purposes of the trade' test in ICTA88/S74 (a)” - see BIM42105.

  You should therefore allow proprietors a deduction for expenditure that merely updates existing expertise or knowledge but disallow any expenditure that provides new expertise or knowledge (particularly where it brings into existence a recognised qualification like an Master of Business Administration).

   

  So, for instance, training that gives you a new certificate which allows you to do something you couldn’t do before (use a chainsaw, spray nasty chemicals about, etc.) could well be a capital expense and not deductible. Expenditure to renew that licence would be an income expense and would be deductible. It’s often not easy to tell whether a specific expense is capital or income, so we were advised to check every course before claiming.

   

  
  Tim Wettone said:

  If training courses for employers aren't tax deductible, then my claims for all my CPD courses over 30 years are at risk, which isn't the case I am relieved to confirm.  Actually, training courses are deductible provided you attend them AFTER you have started in business.  The ones that are not deductible are those that provide you with sufficient knowledge to be able to start trading.  They fail the deductibility test as they are not incurred IN the performance of your duties, but before, and are treated as capital and not revenue items.