Training fees

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jilt
jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
My understanding is that training fees to improve ones skills is tax allowable however if it is to learn a completely new skill then it is not, for example to train to become a financial advisor after being a sports coach. I have looked on HMRC's site for verification of this but cannot find it. Can anyone point me in the right direction or does anyone have a link please?

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  • truecockney
    truecockney Registered Posts: 94 Regular contributor ⭐
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    I know for personal tax allowance purposes, there are some reliefs you can claim. Is this what you are looking for?

    http://www.hmrc.gov.uk/incometax/tax-allow-ees.htm#2

    It doesn't appear to indicate training costs though. Just professional fees that you incur in your own line of expertise.

    Not sure whether this would help with regards to the provision of training costs for a business.

    http://www.hmrc.gov.uk/manuals/eimanual/EIM01200.htm
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
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    Thanks truecockney, I had found the first link regarding subs and fees but that didn't cover training fees. The second link seems to deal with employees.

    My guy is a sole trader who completely changed career and thinks he can claim all the training costs. I will explain that the expense must also be incurred IN the course of his work, to improve skills he already has and that his training was putting him in a position TO DO the work. I just wanted to be able to print something off or be able to send him a link to back this up.
  • imeldabye
    imeldabye Registered Posts: 147 Dedicated contributor 🦉
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    I don't think there is specific guidance on this on the HMRC website - I searched for similiar guidance for my own purposes and couldn't find it. My take on it is that "re-training" costs are not allowable but training which expands and builds on existing skills are allowable.
  • Jmann
    Jmann Registered Posts: 68 Regular contributor ⭐
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    Training cost of gaining new skill for sole trader is not allowable. As the cost is intangbile capital cost.
  • SarahS
    SarahS Registered Posts: 60 Regular contributor ⭐
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    Agree that training for a new skill, as a sole trader is not allowable. Expenses have to be incurred wholly and exclusively for trade and gaining a new skill is not relevant to that trade.

    Limited company is different as the employee would be gaining skills to utilise within their employment and is therefore allowable.
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
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    SarahS wrote: »
    Agree that training for a new skill, as a sole trader is not allowable. Expenses have to be incurred wholly and exclusively for trade and gaining a new skill is not relevant to that trade.

    Limited company is different as the employee would be gaining skills to utilise within their employment and is therefore allowable.

    Well I'm glad we all agree just wish I had some official looking to shut him up ..lol
  • burg
    burg Registered, Moderator Posts: 1,441 mod
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    Not allowable if a new skill

    from HMRC BIM35660 back in '91

    'There is some uncertainty whether the cost of proprietors of a business attending a training course, directly related to the business activity, is deductible in arriving at the profits chargeable to tax under Schedule D Cases I or II.

    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.

    To summarise - 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).

    see link http://www.hmrc.gov.uk/manuals/bimmanual/BIM35660.htm

    Hopefully that helps
    Regards,

    Burg
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
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    Thanks for the link Ian, I spent ages on HMRC's site looking for something but didn't find that, must try harder next time. thabks to everyone for their input.
  • burg
    burg Registered, Moderator Posts: 1,441 mod
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    I searched 'self employed training costs'. about the third or fourth article was about employees training expenses which said at the bottom 'this does not relate to the training expenses of the proprietor or partner which was dealt with separately at .....

    I always find with HMRC you need to try many different searches and then you must read as they have many links to other info.
    Regards,

    Burg
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
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    I didn't think to include 'self employed' in my search, think I used every permutation of training fees, costs, allowable expenditure etc etc but probably mised the most important words. Thanks, hopefully I've leaned something.
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