Training and Exam Fees via LTD

[TOSH1]

Hi

Can your LTD company put you through training courses and also exam fees?

TOSH1

[RichardCranium]

That is a VERY FAQ on here.

A search will tell you how a small LtdCo is the most unfairly treated type of entity in the UK when it comes to investment in its people.

Large companies, individuals, sole traders can all claim almost all training and exams. But directors of very small LtdCos can only claim for training on things they don't need training in.

Personally, I put all work-related training through the books; regardless of the accountant's advice or HMRC's rules. It's wrong but I do it anyway.

[RichardCranium]

Can I claim for training in how to do the company's accounts? No. Expense for accountancy training allowable?

What about academic qualifications? No. Quickie: Training expenses

Driving training (commuting for business, aren't we?) No. Health & Safety - Driver training

What about the VAT? No. Flat Rate VAT - reclaim VAT on training course?

Is it just as strict for big businesses? No. Training costs

Psst. But are other people claiming for training? Yes. Training - valid expense?



Dear Hector, I have some questions.

Don't you think it makes more sense to do training during downtime, rather than during a contract? No.

Don't you think it pointless to need training to do a job one is already doing? No.

Don't you think it makes sense to get training in related fields so one can add more value to clients and thereby attract more business or charge higher fees? No.

Do you want me to know how to run my business better? No.

Do you want me to invest in Continuing Professional Development? No.

Do you want me, as a small business person, to develop the skills of my workforce? No.

Do you want me to grow this business? No.

Do you want me to be able to compete for more work? No.

Do you want me able to generate more income and thereby pay more tax? No.

Do you want me to invest in the future of the UK's economy? No.

Do you want small businesses to invest in Research and Development? No.

Do you want me to think the tax rules are abso-fukcing-lutely stupid? Yes.

HTH

BIDI

[northernladuk]

That is a VERY FAQ on here.

A search will tell you how a small LtdCo is the most unfairly treated type of entity in the UK when it comes to investment in its people.

Large companies, individuals, sole traders can all claim almost all training and exams. But directors of very small LtdCos can only claim for training on things they don't need training in.

Personally, I put all work-related training through the books; regardless of the accountant's advice or HMRC's rules. It's wrong but I do it anyway.

Very nice post indeed Richard C. I totally agree with the last line and do exactly the same as well as the long as the course is somewhat related to what I do. As much as I am quite happy to follow many of the ridiculous rules to the letter I do find this one so out of touch I am quite happy to break it, and IF I get caught out I can stand on my soap box and have a go. How they won't let you train to keep/update your skills to keep the tax £'s rolling in is beyond me. If they catch me I will argue it and then claim I was diligent as it could easily be argued it is allowable. If you show willing you don't get in to trouble. It is only when you take the piss and book your bricklaying course against it they will come down on you.

The only think the OP need to bear in mind here is a bit of common sense when chosing which course to claim. If I was a java developer I wouldn't put down a full SAP course down as that is too far unrelated for my comfort zone.

[malvolio]

Very nice post indeed Richard C. I totally agree with the last line and do exactly the same as well as the long as the course is somewhat related to what I do. As much as I am quite happy to follow many of the ridiculous rules to the letter I do find this one so out of touch I am quite happy to break it, and IF I get caught out I can stand on my soap box and have a go. How they won't let you train to keep/update your skills to keep the tax £'s rolling in is beyond me. If they catch me I will argue it and then claim I was diligent as it could easily be argued it is allowable. If you show willing you don't get in to trouble. It is only when you take the piss and book your bricklaying course against it they will come down on you.

The only think the OP need to bear in mind here is a bit of common sense when chosing which course to claim. If I was a java developer I wouldn't put down a full SAP course down as that is too far unrelated for my comfort zone.

The rule is actually very simple. If the result of the course leads to a direct, work-related improvement in your potential income, it's allowable. So upgrading your coding skills is, upgrading your accountancy knowledge isn't (unless you're an accountant). Which also explains the apparent issue with BigCo - by upgrading their staff they are improving their overall profitability since they have many required skillsets, whereas a one-man band doesn't.

[TOSH1]

I work with CISCO and was hoping to complete my CCNP, and possibly move onto CISCO VOICE as well as PRINCE 2 via LTD.

[RichardCranium]

The rule is actually very simple. If the result of the course leads to a direct, work-related improvement in your potential income, it's allowable.

Are you confident that statement is 100% correct? I don't think it is what the rules say.

"BIM42526 - Specific deductions: administration: own training courses" says (with my notes in red):

Provided it is incurred wholly and exclusively for the purposes of the trade carried on by the individual at the time the training is undertaken (so you must be in a relevant contract and not on the bench), expenditure on training courses attended by the proprietor of a business (either as a sole trader, or in partnership with others) with the purpose of up-dating their skills and professional expertise is normally revenue expenditure, which is deductible from profits of the business.

Business purpose test
In considering the question of purpose, you should not take an unduly narrow view of whether the content of any particular course only up-dates existing skills of the individual. But if it is clear that, for example, a completely new specialisation or qualification (e.g. adding a new programming language or going from DBA to programmer or gaining PRINCE2 or ITIL) will be acquired as a result of the expenditure, it is unlikely that the expenditure will be wholly and exclusively for the purposes of the existing trade.

So if I decide to do a TOGAF or ITIL course to get better-paying project management contracts, my understanding is that it is NOT allowable unless I am already in a contract that needs those skills. Except, of course, I cannot get such a contract without those skills.

And my decision to renew my PRINCE2 just before Xmas when I was on the bench means I cannot claim the cost. Despite it being an updating of an existing skill which I need to continue getting public sector project management contracts.

ISTM the only things you can claim legitimately for are:
- to re-do qualifications you already have, and this must be done while in a contract;
- to get training in subjects needed for your existing contract which you got by lying about existing skills.

The only way to sneak anything new in past the HMRC rules above is to go on a skills updating course where some of the content is new to you, e.g. "PRINCE2 in an ITIL environment" or "Database Administration Advanced: using PL/SQL"



But my stand-up argument to HMRC is: "I am an all-rounder IT professional and can turn my hand to anything and frequently do. I need to keep up to date with the relevant technology, working practices and standards to be able to do my job as a hands-on project manager implementing entire systems. Ergo, any IT-related course is relevant."

[TykeMerc]

It's a fairly absurd situation that like many tax rules appears to be subject to that most dreaded of all tax problems interpretation.
All you need is some moronic HMRC inspector to interpret the rules differently and there's hell (and tax) to pay.

I'm also a PM/Programme Manager and my Prince2 is about to expire, I fully intend to book a hothouse course and exams to renew it and shove the costs through the books. I also intend to do the MSP stuff.
I agree as Project Managers we have the weird situation of being able to argue; with reasonable justification; that technical skills come in handy and things like ITIL can also fall under the PM banner. In my case I've had to implement fair chunks of ITIL (config management systems for instance) so understanding ITIL and its processes could be argued to be a requirement.

Let's face it the rules are a farce.

[craig1]

Is that bit on only claiming while in contract correct? Surely when a company director is "on the bench" his trade remains the same and is still "employed" by his company. I'm a project manager whether I'm actively employed by a client or not and that's my main trade. It would be incredibly narrow if HMRC took the view that I was no longer a project manager when on the bench but still working for my company and I'd be sure that even a part-way competent lawyer would be able to challenge it successfully. That said, tax law is not common sense and I may be talking out of my bottom.

On the narrow scope of training, I agree with the points above that it's daft.

[malvolio]

Are you confident that statement is 100% correct? I don't think it is what the rules say.

Pretty sure...

Working or benched, I'm still primarily a senior PM with ITIL expertise, so Prince., PMP, ITIL, TOGAF, whatever are all in scope, whereas .NET or infrastructure training isn't.
then again I'm not doing ITIL training any more - the fees and compelxities of qualification levels are a serious rip-off.