If you run a limited company, you may need to pay for courses, qualifications or other training to keep your skills up to date.
In many cases, your company can pay these costs and claim tax relief on them.
The main question which determines the tax treatment is whether the training relates to the work you already carry out through the business.
Training which updates your existing knowledge or develops skills relevant to your existing business will usually be an allowable expense. Training for a completely new and unrelated profession or specialisation is much less likely to qualify.
When are training costs allowable?
For the training to qualify as an allowable expense, there must be a clear connection between the course and the work your business already performs.
This covers the obvious examples, such as a contractor attending a course to update technical skills they already use, or a business owner undertaking professional development relevant to their industry.
However, the rules aren’t restricted to courses which simply refresh knowledge you already have.
Training can also teach you new skills or knowledge where these relate to your existing area of business. This is particularly relevant where technology, regulations or working practices have changed and you need to learn something new to keep up.
For example, an IT consultant might undertake training in a new technology which has become widely used within their existing field.
Similarly, an accountant might attend a course covering changes to tax legislation or accounting software.
The fact that you learn something new doesn’t automatically prevent the company from claiming the cost.
What types of training can your company pay for?
There is no definitive list of courses which qualify, as it depends on what your company does and why the training is being undertaken.
Allowable costs could include:
- Professional development courses.
- Technical and software training.
- Courses covering new technology used within your industry.
- Training required to maintain a professional qualification.
- Industry conferences and seminars with a genuine training element.
- Health and safety or other work-related compliance training.
- Online courses relevant to the company’s activities.
Some training in skills that support the running of the business may also qualify; for example, introductory bookkeeping and digital skills courses are cited by HMRC in BIM42526.
What about training for a completely new career?
This is where the distinction becomes more important.
If the training provides you with a completely new specialisation or qualification that is unrelated to your existing business, the cost is unlikely to meet HMRC’s business-purpose test.
For example, if you’re a data analyst contractor and fancy a change in career, you might decide to retrain as an electrician.
An electrician’s course has no real connection with the data analysis work your company currently carries out, so the cost wouldn’t normally qualify as an allowable training expense.
Contrast this with an IT consultant learning a new programming language or technology used within the same general area of work. Although the course teaches new skills, there is a clear connection with the existing business.
The purpose and relevance of the training are therefore more important than whether you already possess the particular skill.
What about professional qualifications?
Professional qualifications aren’t automatically allowable or disallowable.
Again, you need to look at why the training is being undertaken and how closely it relates to the company’s existing activities.
A course that leads to a qualification but develops the knowledge needed in your existing profession may qualify.
A qualification which enables you to move into an entirely different profession is much less likely to do so.
If you’re considering an expensive qualification and the position isn’t clear-cut, check with your accountant before paying for it through the company.
Can the company pay for books and course materials?
Books, subscriptions and other materials needed for qualifying business training can normally be paid for by the company.
The same principle applies: there should be a genuine connection between the expenditure and the company’s activities.
Keep invoices and receipts for these costs with your other company accounting records.
What about travel and accommodation?
You may also incur additional costs to attend a training course, particularly if it takes place away from your usual place of work.
Travel and accommodation costs may be claimed if the journey qualifies as legitimate business travel.
This could include train fares, mileage when you use your own car, and hotel accommodation when an overnight stay is necessary.
The normal rules governing business travel and subsistence continue to apply.
For more information, read our complete guide to limited company expenses.
Training provided to employees
Your company may also pay for work-related training for its employees.
This could include courses, seminars, workshops, training materials and other costs associated with developing the skills an employee needs for their job.
Genuine work-related training paid for by the employer will not normally create a taxable benefit for the employee.
This can make company-funded training a useful way to develop employees without the cost being treated in the same way as additional salary.
Keep records of training expenses
As with any company expense, make sure you keep evidence of what was purchased and why it was needed.
Keep the invoice or receipt for the course together with details of the training.
For courses where the connection to your existing business isn’t immediately obvious, it can also be useful to retain the course description or syllabus, along with a note explaining why the training was undertaken.
This gives you a record of the business purpose behind the expense if the treatment is ever questioned.
Need more advice? Get in touch.
Whether a training course qualifies as a company expense usually depends on its connection to the work your business already carries out.
If you’re planning a course or professional qualification and aren’t sure whether your company can claim the cost, the Integro team can help you check whether it qualifies as a tax-deductible expense before you commit.
Click here to get in touch with the Integro team.
You can also read our complete guide to limited company expenses for more information on the costs your company can claim.
