Training & Expenses

[Rialto99]

ok thanks again Alan...

[Nixon Williams]

Thanks again Alan, although I'm not in the market for an accountant myself at the moment, I’ve already pushed a couple of my fellow contractors your way.

With regard to your answer on question 3, if the training is in fact to be treated as 'capital', how do I account for this in the B/S & P&L? From my limited double entry knowledge, I presume the training will be capitalised as something like intellectual property and the subsequent depreciation allowable over (say) 4 years?!

If this is the case, where exactly do I put the 'new training' on the Balance Sheet, what is the depreciation calculation? and (more importantly) does the company get tax relief on the depreciation / capital allowances?

Cheers

The "asset" is shown as an intangible asset on the balance sheet and written off over a period. Capital allowances are claimed in the normal way at 25% per annum.

I hope this helps

Alan

[Rialto99]

Thanks again Alan, although I'm not in the market for an accountant myself at the moment, I’ve already pushed a couple of my fellow contractors your way.

With regard to your answer on question 3, if the training is in fact to be treated as 'capital', how do I account for this in the B/S & P&L? From my limited double entry knowledge, I presume the training will be capitalised as something like intellectual property and the subsequent depreciation allowable over (say) 4 years?!

If this is the case, where exactly do I put the 'new training' on the Balance Sheet, what is the depreciation calculation? and (more importantly) does the company get tax relief on the depreciation / capital allowances?

Cheers

[Nixon Williams]

Couple of questions to the clever accountants out there:-

1. I've been told I definitely cannot claim Training expenses as an allowable deduction when calculating the deemed payment for IR35 purposes (according to a couple of the contractors I’m working with, training is covered within the 5%) - is this correct?

2. Again, when calculating the IR35 deemed payment, what expenses can I deduct in order to arrive at the deemed payment? For example, from looking at the stuff posted on the HMRC website, it says you can only really claim expenses "that a normal employee would be entitled to claim" - if this is the case, why is everyone telling me that I can claim mileage / travel from my home to work + subsistence (last time I checked, employee's didn't get a tax deduction for these?)

3. Finally, I may well be working 'Outside IR35' again very shortly. If I’m currently working as a Project Manager, can I reclaim the training expenses I'd incur by starting an ACCA (accountancy) qualification? Again, I've had lots of conflicting advice here - some say definitely "yes", some say "no" because it’s training related to acquiring new skills and not updating existing???

Had a damn fine response from Mr Nixon Williams last time I posted so I'd really appreciate anyone's thoughts.

Cheers

Glad to help again!

To answer your points:

1. Yes this is correct, training is not deductable as part of the IR35 calculations, you may be able to use the 5% allowance for this though.

2. You can claim such items as travel, mileage, accommodation the company gets tax relief on these, the employee would claim these as a business expense (on the tax return) and so not be taxed.

3. Training to aquire a new skill is not treated as an expense but as capital! If you enhance a skill then this is allowable.

I hope this helps!

Alan

[Rialto99]

not yet mate, still considering whether its the best thing for me. Cheers for the advice though, I appreciate it...

[malvolio]

1. Yes, entirely correct. One of the great stupidities of IR35...

2. They just changed the rules, wef April 6th but this is about umbrella/MSCs not IR35. If you have your own company (and if not, why haven't you?) you can take out business expenses, accountant's fees and the like as normal. Not training though.

3. Training that is not directly concerned with your business is chargeable but is seen as a BIK so is taxable. Probably better to pay for it out of dividend income or similar.

Enjoy your ACCA by the way - seen the size of Tolley's lately? Why did I ever give up accountancy...

[Rialto99]

Couple of questions to the clever accountants out there:-

1. I've been told I definitely cannot claim Training expenses as an allowable deduction when calculating the deemed payment for IR35 purposes (according to a couple of the contractors I’m working with, training is covered within the 5%) - is this correct?

2. Again, when calculating the IR35 deemed payment, what expenses can I deduct in order to arrive at the deemed payment? For example, from looking at the stuff posted on the HMRC website, it says you can only really claim expenses "that a normal employee would be entitled to claim" - if this is the case, why is everyone telling me that I can claim mileage / travel from my home to work + subsistence (last time I checked, employee's didn't get a tax deduction for these?)

3. Finally, I may well be working 'Outside IR35' again very shortly. If I’m currently working as a Project Manager, can I reclaim the training expenses I'd incur by starting an ACCA (accountancy) qualification? Again, I've had lots of conflicting advice here - some say definitely "yes", some say "no" because it’s training related to acquiring new skills and not updating existing???

Had a damn fine response from Mr Nixon Williams last time I posted so I'd really appreciate anyone's thoughts.

Cheers