Expensing your Training Costs

In this fast paced world where the way in which we deliver our products and services continue to evolve, it may be important for you to develop your skills in order to keep pace.

But personal development can stretch way beyond what we might consider relevant to our business.

Let’s have a look at where the line is between developing your business, and starting a new one.

 The costs associated with the training of You or your team is an allowable expense for business tax where the training:

• helps the trainee maintain existing skills essential to the delivery of your business

• helps the trainee learn new skills related to changes in your industry, or to support your business

• helps keep the trainee up to date with advances in technology in your industry

The latter 2 conditions were only added recently during the 2023 Autumn Statement, recognising that businesses need to develop new skills as their industries respond to the digital and technological revolution.

Where it is deemed that training costs are borne in order to start a new business, or develop skills that are related to your existing industry, they would be disallowable for business tax.

Clearly this is a grey area and you will need to have documentary justification of your training costs in order for them to be recognised as a deductible expense.

Here are some examples, demonstrating what training costs would be allowable and disallowable:

https://www.gov.uk/guidance/check-if-the-cost-of-training-could-be-an-allowable-business-expense#expense-likely-to-be-allowable

If you are a VAT registered business, you will be able to reclaim the VAT suffered on your training costs provided they meet the criteria above.

You should also consider whether your training constitutes a capital expense or is more consumable by nature. This affects accounting presentation and the way in which tax relief is applied.

If you need help assessing your training costs let me know.

Note: I make no judgements around the use of AI for the production of one's narrative. However as policy I can assure the reader that all content produced by this Practice, is written by the Practice without exception.