Training, certification expense limits

[mudskipper]

OK, this refers to self assessment, but is pretty explicit

https://online.hmrc.gov.uk/informati...=TotalExpenses


Training costs you can claim for:
You can claim for the cost of training, if the purpose of the training is to update business skills or expertise.

But you can't claim for costs if the training is for a business related new skill or qualification.


I guess it's down to your appetite for risk - the chances of a week's training course being questioned is pretty small.

[pmasoft]

How about:

BIM47080 - Specific deductions - staffing costs: staff training & development

Where on the other hand an employee or director of a company, on whom the expenditure is incurred, has a significant proprietary stake in the business or is a relative of those who do, there is obviously a much greater chance that expenditure may have been incurred not, or not wholly, for business purposes but to provide the employee with some personal benefit. If that is the case then the expenditure is not deductible - the business purpose has to be the exclusive purpose.

However "personal benefit" does not mean knowledge gained. The example given in the document after your extract states:

If that is the case then the expenditure is not deductible - the business purpose has to be the exclusive purpose. To take an extreme example, there could be no allowance for the educational costs of the business proprietor's son who is employed in the business during university holidays.

Now that is a personal, i.e. financial, benefit of putting uni fees through the business.

[mudskipper]

How about:

BIM47080 - Specific deductions - staffing costs: staff training & development

Where on the other hand an employee or director of a company, on whom the expenditure is incurred, has a significant proprietary stake in the business or is a relative of those who do, there is obviously a much greater chance that expenditure may have been incurred not, or not wholly, for business purposes but to provide the employee with some personal benefit. If that is the case then the expenditure is not deductible - the business purpose has to be the exclusive purpose.

[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.

[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]

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

[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.

[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?

[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.

[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".