Reply to: Training Costs

[geoffreywhereveryoumaybe]

It isn't about a new skill

TOGAF is a very generic framework. It teaches you how to do enterprise architecture in a standardised manner. So its not really a new skill for anyone already in IT.

It is about getting certification that you can put on your cv so that the people looking for architects can tick a box and say that person is TOGAF certified.

The same with Prince2

[SueEllen]

Personally, I think that allowing tax relief on training would be the right thing to do (so long as it's not a jolly) but HMRC think otherwise.

I think you find that some of HMRC's staff like other public sector permanent employees would have been sent on random training courses so don't see it that way.

They also provide courses themselves to the public aimed at small business people that in our cases travel to and from them are legitimate business expenses. (The courses are free and may use you attending the course as example subject matter.)

Also it's clear you and a few others, including one of the accountants, has no idea what sort of courses the OU and other colleges/universities do aimed at professional people.

For starters the OU courses are modules that last a few months. This means if a particular module is relevant to your skillset and your clientele there is nothing stopping you from putting this through as a business expense.

Many local colleges and universities realised years ago that they can make money from offering short courses in a variety of subjects aimed a professional people. Again if a short course is relevant and cheaper than going to private training provider there is nothing stopping you from doing it and putting it through as a business expense.

'Also colleges and universities tend to be VAT exempt meaning that there is no VAT issues for companies on the flat rate scheme unlike with private training providers.

[JamJarST]

If it doesn't attract CT relief but also doesn't incur any BIK personal taxes to you (is this the case?) then it's well worth it.

Thats the point that I'm not sure about, I would assume it would be a BIK.

[speling bee]

? What'd be the point in that? Might as well just pay for it with your credit card in this case?

If it doesn't attract CT relief but also doesn't incur any BIK personal taxes to you (is this the case?) then it's well worth it.

[psychocandy]

Just a thought...is your accountant saying you can't put the course through your Ltd at all? As that link I provided suggests that even if it is not allowable, you can still put it through the Ltd but it won't attract any tax relief for CT, which is better than not being able to claim it all!

? What'd be the point in that? Might as well just pay for it with your credit card in this case?

[Andrew at Boox]

It must indeed be related to your current work. Pre-training, languages, OU, MBA courses etc all fall outside...[/url]

Agreed. I think it's always important to remember that while business expenses should be wholly and exclusive, any personal benefit should be purely incidental.

MBA's, Honours degrees etc. are hardly for business purposes, but a reasonably shorter course required to minimise the jeopardy of losing a contract should be ok IMO.

[speling bee]

Yes, but the difficulty is that a big company spending money on training courses has a potentially negative impact the company's bottom line profit whereas a one man limited company putting it's director through a training course is directly benefiting the director and reduces the net tax paid.

For a large company there will be careful consideration of the cost/benefit of staff training but for a one man LTD company it's a no brainer because the director benefits and gets tax relief on the cost of the training.

Personally, I think that allowing tax relief on training would be the right thing to do (so long as it's not a jolly) but HMRC think otherwise.

But look at the example exclusions above. I as a director only get a direct benefit in as much as it enables me to increase the company's business. Unless I am pulling a fast one and paying for an expensive course up front and then closing the company down.

[Wanderer]

We all know what these companies do. Our Ltd's are also companies.

Yes, but the difficulty is that a big company spending money on training courses has a potentially negative impact the company's bottom line profit whereas a one man limited company putting it's director through a training course is directly benefiting the director and reduces the net tax paid.

For a large company there will be careful consideration of the cost/benefit of staff training but for a one man LTD company it's a no brainer because the director benefits and gets tax relief on the cost of the training.

Personally, I think that allowing tax relief on training would be the right thing to do (so long as it's not a jolly) but HMRC think otherwise.

[speling bee]

This isn't that relevant though. Employers can put employees through any number of courses to grow them as an asset to the company. This doesn't mean it is allowable for tax purposes. What companies do isn't directly related to what we can do. We don't know how they handle it tax wise and the size of the company makes it easier to swallow (or hide).

Nonsense. We all know what these companies do. Our Ltd's are also companies.

Have a look at: Employment income: work-related training: excluded expenditure/apportionment of costs

Excluded expenditure
An employer's expenditure will not qualify for exemption under Section 250 ITEPA 2003 (see EIM01210) if, or to the extent that, its purpose is to:

provide facilities or benefits for entertainment or recreational purposes which are not in any way connected with acquiring the knowledge, skills, or personal qualities which satisfy the definitions of work-related training. So normal meals, refreshments and leisure activities offered within a training course are not taxable.
reward the employee for performing, or performing in a given way, the duties of his/her employment
provide an employment inducement which is not in any way connected with acquiring knowledge, skills, or personal qualities which satisfy the definitions of work-related training. For example safe-driver training, taken up by those with a company car, would qualify whereas an evening at the go-kart track would not. Generally, work related training offered as part of the normal recruitment process is unlikely to be a taxable inducement. But the more abnormal the training offer, in nature or amount, the more likely it is that the provider intended the provision as an inducement.

I think it needs to be pretty egregious to be excluded. We need to think like real businesses rather than semi-tax-dodgers terrified of being 'caught'. If I wanted to do a conversational Spanish course for my holidays, I wouldn't put it through. If I had a contract that required me to brush up my Italian, then I would put a business Italian course through the books. Becuase I need to to run my business.

[captainham]

Delboy of the contractor world has spoken.

Delboy knows he is taking the mick, I think this guy is actually serious in what he writes...

[northernladuk]

Just build your own IOS app and publish it in the app store.
Then to write the app, you need a mac (mac book pro)
Then to test the app, you need:
- ipad 1/2/3/mini
- iphone 5/4S/4/3S/3

Delboy of the contractor world has spoken.

[lithium147]

Loads of contractors put all manor of IT hardware from tablets upwards down as a business expense and justify it as getting acquainted with the technology and in my mind these are dubious but acceptable expenses.

Just build your own IOS app and publish it in the app store.
Then to write the app, you need a mac (mac book pro)
Then to test the app, you need:
- ipad 1/2/3/mini
- iphone 5/4S/4/3S/3

[SueEllen]

... and an interesting post Captain Ham Man.

Loads of contractors put all manor of IT hardware from tablets upwards down as a business expense and justify it as getting acquainted with the technology and in my mind these are dubious but acceptable expenses.

Why is it dubious?

It may be dubious for you as you have no need to write notes in meetings or write/test applications that have a web interface and can be used on tablets. However for someone else, even if they are on your team, they are going to have a different set of skills.

In my case, I am about to land a contract where the job spec looked for the skill I was training in so I am going to insist that we run it through the business as an allowable expense.

Fair enough.

Personally I would change accountants to one that understood that IT courses and certifications that aren't degrees plus a few other courses can be claimed by someone who works in IT as a business expense.

[geoffreywhereveryoumaybe]

Thanks for the posts ...

... and an interesting post Captain Ham Man.

Loads of contractors put all manor of IT hardware from tablets upwards down as a business expense and justify it as getting acquainted with the technology and in my mind these are dubious but acceptable expenses.

In my case, I am about to land a contract where the job spec looked for the skill I was training in so I am going to insist that we run it through the business as an allowable expense.

[captainham]

The trouble is that our accountants will give their own opinion, people here are looking for a broader discussion of other people's opinions (maybe even yours!) of what's acceptable.

Fair enough (except the bit about wanting my opinion...you must have got that wrong ) !

For me, any training to do with my profession, i.e. the skill/knowledge that currently brings in my Ltd's income, is well within the scope of what is allowed as a deductible expense.

As Greg said earlier, this could be quite a broad scope, so something like speling bee's PRINCE2 would be included in that scope.


Ask yourself this: are you going on a course to improve/expand your knowledge/marketability in your current area of expertise? If the answer is yes then that's a no-brainer for me.

As long as you are sure you are going on a course for the right reasons (and not just a blatant p!ss-take/jolly for no other reason than you feel like it), then even if HMRC wanted to challenge this in the future (and hopefully they shouldn't), it shouldn't be much of a stretch to come up with a convincing argument as long as you have convinced yourself in the first place that it's being done for all the right reasons.


At the risk of going OT:

Can't remember who said recently-ish on a thread about expenses and what is acceptable there, but anyway he said he had recently bought not one but 3 PCs for his Ltd. Excessive/mick-taking? In his case, no as he could genuinely justify a sound business reason why this kit was needed, so if HMRC wanted to challenge it, bring it on (or words to that effect).

I on the other hand have just bought a new Android tablet, but out of my own pocket. Yeah I probably could have 'got away with' putting it through my Ltd, but in my line of work it's not justified (it's a personal gadget, pure and simple), so if you can't convince yourself about why you are spending your Ltd's money, good luck convincing the taxman!