Training, certification expense limits

[TheCoconutDog]

Training, certification expense limits

It's actually perfectly simple: "Wholly and Exclusively" remains the baseline. If you aren't already earning money doing it, you fail that test since you personally gain from the additional skills or qualifications

BigCo gets away with it because they can argue that they need the skills in house so will train the most suitable candidates. However, if those people leave shortly afterwards they will almost certainly be billed for the training costs, for exactly the same reason..

It's taxation. It's never "perfectly simple", there are always shades of grey. You could make the same argument for SmallCo as that of BigCo.

[pmasoft]

It's actually perfectly simple: "Wholly and Exclusively" remains the baseline. If you aren't already earning money doing it, you fail that test since you personally gain from the additional skills or qualifications.

No it isn't perfectly simple, or we would not have this and other ongoing threads.

An example, off the top of my head, would be IT training. Most of us carry out training/knowledge transfer of permies. So if your LtdCo diversifies into training courses to add an extra revenue stream and feels your presentation skills need improving they may send you on a relevant course. However those presentation skills may then enable the LtdCo or you personally to provide non-IT courses.

BigCo gets away with it because they can argue that they need the skills in house so will train the most suitable candidates. However, if those people leave shortly afterwards they will almost certainly be billed for the training costs, for exactly the same reason.

LittleCo can use the same argument; it can only work with in-house resources as would BigCo if it wasn't willing to hire in new staff.
The cost reclaim would only happen if it is written into your employment contract and the definition of "shortly" would be specified as an actual timeframe.

[malvolio]

Well if you're not going to listen here's no point arguing. HMRC have defined the boundary.

You're wrong. End of.

[pmasoft]

Well if you're not going to listen here's no point arguing. HMRC have defined the boundary.

You're wrong. End of.

I am listening, but just pointing out that you are not looking at the big picture but have been hoodwinked by HMRC "guidelines".

[mudskipper]

I am listening, but just pointing out that you are not looking at the big picture but have been hoodwinked by HMRC "guidelines".

That's a fair point - HMRC guidance is not the same as legislation, and it could be that, if you took it all the way, a court would find in your favour. But you'd have to have a fair appetite for a fight (and the expense and stress that comes with it) to ignore the guidance and fight an alternative viewpoint.

As someone else pointed out, it only ever becomes an issue if HMRC challenge it, which, if everything else is in order, is probably fairly unlikely.

[TheCoconutDog]

Well if you're not going to listen here's no point arguing. HMRC have defined the boundary.

You're wrong. End of.

AYCOTBAC?

[northernladuk]

You can't really compare what we do and what big companies do. They invest in their people to make more money, not train up and try and catch a tax break. If you need training on a new area that's gonna make more money just do it and forget the tax. If it's what you are doing now the tax break is a sweetener. I wouldn't let the tax tail wag the dog when it comes to long term contracting.

[pmasoft]

You can't really compare what we do and what big companies do. .

I bet Richard Branson said the same thing when he started out

[TykeMerc]

It's actually perfectly simple: "Wholly and Exclusively" remains the baseline. If you aren't already earning money doing it, you fail that test since you personally gain from the additional skills or qualifications.

BigCo gets away with it because they can argue that they need the skills in house so will train the most suitable candidates. However, if those people leave shortly afterwards they will almost certainly be billed for the training costs, for exactly the same reason.

That argument looks simple, but it's a bit more complicated in the real world.

Like most of us I don't work entirely at one type of task and I never have.
I became a full time PM after a couple of years of combining infrastructure engineering with bits of PM and service management and these days I do Programme Management, Business Consultation and Architecture, the way you put it in black and white terms what line could I actually train in? I've spent the last 10 months working on an SAP rollout programme, could I train in SAP techie fields?

In reality many contractors could argue they earn money in multiple fields so they could defend an argument they're simply improving on skills they have to an extent.

[pmasoft]

Extract from HMRC 480(2015)

OK I have had a search and found the following. Please note "reward" does not relate to knowledge gained and "new job" is not the same as "change of duties or extension thereof":

5.25
There is a wide statutory exemption for payments or reimbursements,
by employers or third parties, of expenditure on the provision of
work-related training.
However, any payment or reimbursement of training costs which has as
its purpose:
• an intention to reward the employee
• the provision to the employee of an employment inducement (for example,
to take up a new job)

Sections 270A,
318 and 318A
• enabling the employee to enjoy the facilities or benefits for entertainment
or recreational purposes unconnected with ‘work-related training’ will
remain taxable
The rules provide for the following:
• expenditure which is incurred for a mixed purpose (part-reward,
part-training) will need to be apportioned. Apportionment is not necessary
just because an element of genuine training is enjoyable or recreational. For
example, the incidental use of a hotel’s swimming pool and leisure facilities
during a residential course will not require apportionment
• exemption applies to both internal and external courses
• there is no territorial limitation on the location at which training
is undertaken
• exemption extends to a range of training materials including audio/video
tapes and compact/floppy disks
• exemption applies not only to the cost of providing qualifying training, but
also extends to related costs, such as the cost of additional childcare and
the travelling and subsistence costs of the trainee
• the definition of work-related training includes training which is linked to
charitable and voluntary activities
• the exemption from tax is mirrored by a NIC exemption
• incidental overnight expenses can be paid tax-free to employees on training
courses in the same way as such expenses can be paid tax-free when an
employee is away on business
• generally, the exemption does not extend to the cost of providing the
employee with, or with the use of, any asset once the training has ended -
exceptions are dealt with in Appendix 9
More information and guidance about the exemption for work-related
training is given in Appendix 9.

Extract from Appendix 9

Work-related training
Work-related training is training for an employee’s current employment or a
‘related employment’.
�
It is defined as any training course or other activity which is designed to
impart, instil, improve or reinforce any knowledge, skills, or personal
qualities which:
�
• are, or are likely to prove, useful to the employee when performing his or
her duties, or
• will qualify or better qualify the employee to undertake the employment, or (My highlight)
to participate in charitable or voluntary activities arising through
the employment
The term includes a wide range of practical and theoretical skills, so long
as those skills are relevant to the employee. Where leadership team skills
are appropriate to the employee, participation in activities such as Outward
Bound, Raleigh International, or Prince’s Trust will qualify. The cost of an
employee’s participation in a genuine Employee Development Scheme, which
seeks to improve the employee’s attitude towards training by commencing
with an enjoyable course as an introduction to more concentrated job-related
training, will also qualify.