If a cost is wholly and exclusively for the use of the business it can be claimed as an expense. Some training costs can be claimed, however there are rules as to what you can and cannot claim.

Work-related training costs can be paid for through your company and you will be able to claim the costs as an expense though only if the training will build on or improve an individual’s existing skills.

However, if the training is in a new skill, then this will be considered a capital expenditure, so your company will only be able to claim Capital Allowances. In a nutshell this means training is seen as an asset of the company. So the cost of the training is taken off before your annual profit is calculated. Each year you will need to pay back the company a small amount as this is the depreciation in value of the asset (i.e. the training). We do recommend you speak to your accountant to see if this is the best method for you to use.

You should note the following criteria:

  • In order to qualify, the training must have the goal of providing, enhancing or reinforcing any knowledge, competence, or personal proficiency which will enable or improve an individual’s ability to perform their duties.
  • Any costs associated with undergoing training, such as the costs of travelling to an alternative location or accommodation are allowable so long as the training takes place at a temporary location.

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Overseas training

HMRC will general only consider overseas training allowable if you can show that it is absolutely necessary to complete said training in order to carry out your duties. Costs for overseas training will not normally be allowed unless you can clearly demonstrate the following: 

  • Prove beyond doubt that the trip is not personal by providing an itinerary which gives details of the events or activities involved
  • Show that the nature of the training is absolutely essential to your duties and that they could not be performed without attending the training

There are also other factors to be considered:

  • HMRC will be particularly keen to scrutinise trips to exotic locations in detail
  • Any costs associated with enjoying a leisure activity or extension of a stay for personal purposes will be disallowed
  • If the trip was primarily for the purposes of leisure, then any training undertaken will be considered incidental and associated costs will not be allowed

How can Nixon Williams Help?

 

Many people going into business for themselves will need to keep their skills up to date and ensure that their professional qualifications are current, so understanding the way training is treated as an allowable expense is important.

If you want some expert advice on what you can and cannot claim, as well as support in every other area of your business, then our experienced accountants could make your career as an independent professional much more lucrative. To find out how we can help you, call today on 01253 362062 or email Jacqui.fairbrother@nixonwilliams.com.