Training, certification expense limits

[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]

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]

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]

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.

As you say this is for SA and therefore personal tax. It does not apply to incorporated businesses whereby HMRC 408 spells it out in detail

[mudskipper]

Are you a member of IPSE? It might be worth asking on their forums which bit of HMRC guidance supports the following

https://www.ipse.co.uk/advice/tax-tr...iness-expenses

Where the purpose of training is to provide a business owner with new skills, the cost is treated as capital and is not deductible for income tax. If the purpose is to update existing skills, then the expense is allowable.


Most of the accountant websites say the same, so it would be good to understand from where they are getting that - any comments from the accountants?

[pmasoft]

Are you a member of IPSE? It might be worth asking on their forums which bit of HMRC guidance supports the following

https://www.ipse.co.uk/advice/tax-tr...iness-expenses

Where the purpose of training is to provide a business owner with new skills, the cost is treated as capital and is not deductible for income tax. If the purpose is to update existing skills, then the expense is allowable.


Most of the accountant websites say the same, so it would be good to understand from where they are getting that - any comments from the accountants?

I used be a PCG member, in fact one of the first. However, I am not an IPSE member as I have no current need.

Here is the IPSE extract from your above link re: training :-

Where the purpose of training is to provide a business owner with new skills, the cost is treated as capital and is not deductible for income tax. If the purpose is to update existing skills, then the expense is allowable. Where the IR35 rules apply, training expenses may be included within the 5% allowance for general expenses but not claimed separately in their own right.

Note highlight:"Business owner" and "income tax" This appears to have been taken from the personal tax criteria and not corporation tax rules.

I will stick with the incorporated business rule as HMRC states on their website in 408(2015) as quoted in my previous thread entry.

[malvolio]

I used be a PCG member, in fact one of the first. However, I am not an IPSE member as I have no current need.

Here is the IPSE extract from your above link re: training :-

Where the purpose of training is to provide a business owner with new skills, the cost is treated as capital and is not deductible for income tax. If the purpose is to update existing skills, then the expense is allowable. Where the IR35 rules apply, training expenses may be included within the 5% allowance for general expenses but not claimed separately in their own right.

Note highlight:"Business owner" and "income tax" This appears to have been taken from the personal tax criteria and not corporation tax rules.

I will stick with the incorporated business rule as HMRC states on their website in 408(2015) as quoted in my previous thread entry.

Feel free, but the above quote is the appropriate one, that applies to our companies. You need to distinguish between a personal gain and a corporate one. For a close company, where you are the only or one of very few shareholders, it is very difficult to separate the two. BigCo doesn't have that problem since it has multiple shareholders.

As for "However, I am not an IPSE member as I have no current need", you are kidding us, aren't you...

[pmasoft]

Feel free, but the above quote is the appropriate one, that applies to our companies. You need to distinguish between a personal gain and a corporate one. For a close company, where you are the only or one of very few shareholders, it is very difficult to separate the two. BigCo doesn't have that problem since it has multiple shareholders.

As for "However, I am not an IPSE member as I have no current need", you are kidding us, aren't you...

It is appropriate according to IPSE. However they are not infallible.

Why would I kid you about being a member of IPSE? I have been in business for over 30 years and more than capable of getting a contract assessed/modified without their help. Indeed IT contracts are quite straightforward compared to some I have to deal with in my other businesses.

[malvolio]

It is appropriate according to IPSE. However they are not infallible.

No perhaps not - but their advice is qualified and authoritative and, in this case, comes from an expert in tax law, so don't dismiss it too lightly. Certainly don't value it above your own opinion.

Why would I kid you about being a member of IPSE? I have been in business for over 30 years and more than capable of getting a contract assessed/modified without their help. Indeed IT contracts are quite straightforward compared to some I have to deal with in my other businesses.

So ignoring the side benefits like protection against various loss-making events like non-payment and agency defaults, and access to a whole load of discounted services, when the brown envelope from HMRC for anything at all to do with taxation arrives, you're on your own and looking at a £15k bill to prove your innocence. I'm a full blown architect with 35 years in the trade and as far from IR35 as you're likely to get, but I see my membership as a necessary business protection.

Or are you still stuck in the mindset that IPSE is all about IR35 and nothing else?

[pmasoft]

No perhaps not - but their advice is qualified and authoritative and, in this case, comes from an expert in tax law, so don't dismiss it too lightly. Certainly don't value it above your own opinion.

I don't I rely on my tax solicitor and accountant's opinion. I am not saying IPSE do not have their place but they are not the only show in town.

So ignoring the side benefits like protection against various loss-making events like non-payment and agency defaults, and access to a whole load of discounted services, when the brown envelope from HMRC for anything at all to do with taxation arrives, you're on your own and looking at a £15k bill to prove your innocence. I'm a full blown architect with 35 years in the trade and as far from IR35 as you're likely to get, but I see my membership as a necessary business protection.

Or are you still stuck in the mindset that IPSE is all about IR35 and nothing else?

If HMRC come knocking I simply direct them to my accountants etc who assessed the contract. They then resolve it as part of the service.

What is a "full blown" architect: is that better than RIBA, or just overweight?