Claim course costs against tax

[PeteMc]

Hi

Has anyone had experience of claiming the cost of an electrical course against their tax? If you were a sole trader working as an electrician and it was an electrical course for yourself.

Cheers Pete.

 

[Leesparkykent]

BIM42526 - Specific deductions: administration: own training courses
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, 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 the profits of the business. See BIM35660.


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 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. For general discussion of business purpose see BIM37050 onwards.

this is off HMRC website.

You can read the full HMRC guidance here


BIM42526 - Specific deductions: administration: own training courses

 

[Octopus]

If you are maintaining a skill set (say doing the 18th Ed) it is tax deductable.

If you are undertaking training to improve your skills its not.

Go figure!

 

[PeteMc]

Many thanks, helps a lot. So looking through the bumpf, a refresher course to an existing qualification would be classed as expenditure, a new qualification in the same skill set would not.

 

[newtothis]

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 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. For general discussion of business purpose see BIM37050 onwards.

If it's for your existing trade YES, if you fancy doing a flower arranging, or kick boxing course then NO

 

[PeteMc]

So if a person needed an 'additional' qualification to their skillset it would be allowed? Eg if you haven't got 2394/5 but have other electrical quals.
Seems sketchy, which is why I ask if others have experience of this.
Cheers.

 

[Octopus]

The advice the tax office gave me is that getting new additional qualifications isn't tax deductable.

Go figure.... and people wonder why training is poor in this country.

 

[Guest125]

My dog is a guard dog for my tools. I say tax deductible....

 

[Anthony S]

Put it down, you save what ? 20% in the pound in Tax, so if its wrong they will just send you a bill for it back.

 

[Leesparkykent]

Deductions for the self-employed
HMRC views about training course for the self-employed is set out in Tax Bulletin 1G, which became Revenue Interpretation (RI) 1. It says: "Where attendance at a course is intended to give business proprietors new expertise, knowledge or skills which they lack, it brings into existence an intangible asset which is of enduring benefit to the business. We take the view that the expenditure is therefore of a capital nature, and deduction is prohibited by ICTA88/S74 (f) (now s.33 ITTOIA 2005).

"On the other hand, where attendance is merely to update expertise etc. which proprietors already possess, the expenditure is normally regarded as revenue expenditure and will be deductible if it satisfies the `wholly and exclusively for the purposes of the trade' test in ICTA88/S74 (a) (now s.34 ITTOIA 2005)."


Revenue v capital
In short it is initially a question of looking at the facts, and taking exactly the same approach in considering whether the cost is revenue or capital as one would for any other type of cost. Those who have done full professional exams in the past will have covered a broad range of topics in those exams, and any course will be regarding as updating expertise, knowledge or skills that have already been created.

 

[D Skelton]

The advice I got from my accountant made it clear to me. He said that if you need to do a course that was neccessary, within reason, to continue your trade, then it's tax deductible.

That means for your average qualified self employed spark, as far as I understand it, no course is tax deductible other than regulation update courses as you won't be accepted as a member of a scam without one.

There are of course others, such as asbestos awareness updates, IPAF updates, CompEx updates, Pasma updates etc... that are tax deductible if you need them to maintain registration with relevant bodies.

A T&I course would not be tax deductible as you don't 'need' it to continue practicing your trade.

That's what I have been advised anyway. Others may take a slightly different approach.

I guess ultimately, if push came to shove, it would be down to HMRC to judge each case on it's own merit.

 

[Guest125]

Deductions for the self-employed
HMRC views about training course for the self-employed is set out in Tax Bulletin 1G, which became Revenue Interpretation (RI) 1. It says: "Where attendance at a course is intended to give business proprietors new expertise, knowledge or skills which they lack, it brings into existence an intangible asset which is of enduring benefit to the business. We take the view that the expenditure is therefore of a capital nature, and deduction is prohibited by ICTA88/S74 (f) (now s.33 ITTOIA 2005).

"On the other hand, where attendance is merely to update expertise etc. which proprietors already possess, the expenditure is normally regarded as revenue expenditure and will be deductible if it satisfies the `wholly and exclusively for the purposes of the trade' test in ICTA88/S74 (a) (now s.34 ITTOIA 2005)."


Revenue v capital
In short it is initially a question of looking at the facts, and taking exactly the same approach in considering whether the cost is revenue or capital as one would for any other type of cost. Those who have done full professional exams in the past will have covered a broad range of topics in those exams, and any course will be regarding as updating expertise, knowledge or skills that have already been created.

Reading between the lines I see it as; if you are training yourself in your current trade or something associated in your trade then tax deductible. If you are just signing up for any old balls in an attempt to spend some of your profit then not TD....

 

[Octopus]

Just a classic example of how stupid the tax rules are;

They should say

a) What is tax deductable - update courses for existing qualifications

b) What is not tax deductable - new skills training

Which just goes to show how shortsighted Governments of all colours have been for 35 years!

 

[D Skelton]

Reading between the lines I see it as; if you are training yourself in your current trade or something associated in your trade then tax deductible. If you are just signing up for any old balls in an attempt to spend some of your profit then not TD....

As far as I understand it's got more to do with what you need to continue your trade.

A domestic plumber/heating 'engineer' for example can claim his costs for renewing his GasSafe registration as tax deductible as he wouldn't be able to work without it. He can't however claim his costs for completing an industrial high pressure steam distribution course as tax deductible as he doesn't need to complete the course to continue working in his current capacity.

Same goes for us. If you're a jobbing self employed spark without 2391 or 2394/5, you're not going to lose work as a result of not having them, hence these types of courses being non-tax deductible.

I suppose you could argue that in a hypothetical situation where you win a bid and the buyer says, "right, now you've won, you're guaranteed the contract, however before you start, you need to complete the 2394 and 2395. Until you have, you cannot proceed", that you needed those courses in order to continue working.

At the end of the day, the decision is made at Her Majesty's pleasure.

 

[Skimpy Wan]

I've been having this discussion recently with my accountant. He, and I, seem to be under the same impression that new qualifications aren't eligible, but revision / update courses are.

 

[Deleted member 26818]

My understanding is that qualifications required for you to be able to trade in a particular profession, would not be eligible, but any others needed for you to be able to continue trading do qualify.
In my particular circumstances, I would list claimable qualifications as being 2391/4/5/6, 17th edition updates, LUCAS/PTS, PASMA, IPAF, Absbestos Awareness, JIB/ECS, First Aider, Confined Spaces, Step Ladders, etc, etc.
If it ever became a requirement for me to hold an NVQ, then I would claim for that as well.

I also claim for my Passport, as whenever I sign up with a new Agency, I am required to provide them with a copy, to prove I am eligible to work in the UK.

 

[HappyHippyDad]

I had a (good) accountant for my first year as a sole trader and he made it clear that I was not able to claim any tax back for the cost of my initial course. Thats as far as my knowledge runs.

 

[Deleted member 26818]

Yes, I would agree in general with you HHD.
The only exception would be, if you were already trading as an Electrician without qualifications, then decided to get qualified.
Whether the HMRC would agree would be another matter.

 

[Adam W]

I've only been self-employed as far as doing agency work, but I've always claimed for electrical courses. It seems companies and agencies are asking for more and more these days, so having 2394/5, IPAF, asbestos awareness etc is going to give me a better chance of getting work. Without staying competitive I'd just be sat at home not paying any tax.

I'll quite happily explain all of that to some civil servant who sometimes turns up to put in a few hours at the tax office depending on what kind of mood they're in. All they have to do is ask.

 

[newtothis]

My understanding is that qualifications required for you to be able to trade in a particular profession, would not be eligible,

That's kinda spot on. Example: You could do a course in plumbing with the intention of trading as a plumber.
You can't claim that as an expense.............. unless you begin trading as a plumber.