Training costs

[loubylou]

New to this so go easy on me please!

I have a limited company set up, as my contract ends in about a week I was thinking about doing some training to fill the gap.

Can I pay for the registration and annual fees to the professional body plus the training course directly from the company or do I have to pay for it myself and reclaim it somehow?

If this has been covered previously could someone point me to the posts...

Thank you

[chrisl]

I have found this, dont know how correct it is.



It has now become apparent from new HM Revenue & Customs rules and a recent court case that claimed training expenses as a director is not as simple as first thought.

Firstly, for a training course to qualify as an expense to the company it must firstly meet the ‘wholly, exclusively and necessary’ rule in that the training must relate to the job you do.

Secondly, the fee for the training must actually be paid to the training company from your company bank account. It should not be paid by you and reclaimed. You will normally be required to make a payment into your company bank account and then pay the training company directly.

The receipt for the training course should also be obtained in your company name so it can be processed against the company.

[pmeswani]

I have found this, dont know how correct it is.



It has now become apparent from new HM Revenue & Customs rules and a recent court case that claimed training expenses as a director is not as simple as first thought.

Firstly, for a training course to qualify as an expense to the company it must firstly meet the ‘wholly, exclusively and necessary’ rule in that the training must relate to the job you do.

Secondly, the fee for the training must actually be paid to the training company from your company bank account. It should not be paid by you and reclaimed. You will normally be required to make a payment into your company bank account and then pay the training company directly.

The receipt for the training course should also be obtained in your company name so it can be processed against the company.

Interesting. So if the business account lacks the funds to pay for the course at that time, but you (as the individual) have money to pay for it, but know that before the contract ends your company bank account can re-imburse you, you lose?

[dmini]

You will normally be required to make a payment into your company bank account and then pay the training company directly.

What payment INTO your company bank account? Doesnt make sense!

What was the source of this?

[tim123]

Interesting. So if the business account lacks the funds to pay for the course at that time, but you (as the individual) have money to pay for it, but know that before the contract ends your company bank account can re-imburse you, you lose?

No, that what Director's loan accounts are for.

(Contrary to the view of most people here. Loan accounts are meant to be money owed by the company, to the Director, not the other way round).

tim

[s2budd]

If you want to do a training course then just bill it to your company (along with any hotel expenses. As long as the training is related to your current, past or future role then I can't see a problem. I know that HMRC like to make things all very complicated and over regulated (Oh I do wish that there was an election soon) but if in doubt or it is queried then just write a few paragraphs explaining why the course was relevant. So long at it is not something like plastering or flower arranging when you are a Project Manager by trade then it will all be Ok in the end.

[s2budd]

Best to wait until there are funds in the company though if I were you - or pay yourself less.

[tim123]

New to this so go easy on me please!

I have a limited company set up, as my contract ends in about a week I was thinking about doing some training to fill the gap.

Can I pay for the registration and annual fees to the professional body plus the training course directly from the company or do I have to pay for it myself and reclaim it somehow?

If this has been covered previously could someone point me to the posts...

Thank you

As per the normal rules, the company is allowed to buy its director anything that it wants.

The real question is, does that purchase generate a Benifit in Kind for tax purposes?

The rules for training courses are:

A course which is *required* to do a specific piece of work which the company are currently contracted to do, is an allowable expense for tax purposes.

A course which increases your skills so that the company (or the individual) is now in a position to win work that it previously would not have won, is not.

Obviously there are some things which fit in the gap in the middle.

Professional fees are almost always tax deductable (even for some of the more micky mouse organisations).

tim

[dmini]

Just did some further digging. The case quoted, almost certainly is Dass v special commissioners - he was self employed. Interestingly, the article I just saw said that if he had been limited it mightnt have been an issue. A lot of the issues are to do with his employment status

http://www.taxationweb.co.uk/tax-art...ong-track.html

Generally Tim123 takes the route I follow, and my accountant hasnt queried it - and she does nit-pick occasionally!

[MPwannadecentincome]

As per the normal rules, the company is allowed to buy its director anything that it wants.

The real question is, does that purchase generate a Benifit in Kind for tax purposes?

The rules for training courses are:

A course which is *required* to do a specific piece of work which the company are currently contracted to do, is an allowable expense for tax purposes.

A course which increases your skills so that the company (or the individual) is now in a position to win work that it previously would not have won, is not.

Obviously there are some things which fit in the gap in the middle.

Professional fees are almost always tax deductable (even for some of the more micky mouse organisations).

tim

Are these rules for directors and there are different rules for employees?

If there are different rules for employees and you pay yourself PAYE then can you not say the employee rule applies?

I'd be surprised if all the big companies were not getting tax relief for all the courses that all the employees go on!

Or is it one rule for contractors and another for big business?